SOLVENCY II
UK Regulator Closing in on Final Solvency II Review, Rules Update
LONDON //BestWire// - The United Kingdom’s Prudential Regulation Authority said it is planning a mid-November release for its final rules following its review of Solvency II, which will update requirements for insurance firms and groups.
The rules will go into effect Dec. 31, 2024, according to a statement from the PRA.
The main piece of PRA’s 2024 proposal is to restate assimilated law from the European Union’s Solvency II framework into its own policy material without many material changes, the authority said. Eventually, Solvency II will be known as Solvency UK as the country moves away from EU regulations.
PRA said it made few policy change proposals this year as many of its reform priorities were addressed in previous consultation papers and to add substantive changes now would slow the implementation of those reforms.
For example, 2023’s consultation paper included changes to matching adjustment regulations, made risk management enhancements and placed greater responsibility on the part of senior managers (BestWire, Sept. 29, 2023).
One area of policy that could see reform is around time-limited transitional rules in the own funds portion of PRA’s rulebook. The authority said it is considering permitting firms to continue treating legacy paid-in preference shares issued before Jan. 18, 2015, as not relevant when assessing compliance of ordinary shares, with certain T1 Own fund requirements, for a 25-year period.
PRA’s proposals also include updates to the conversion rate for accounts dealing primarily with euros.
Attempts to gain further comment from the PRA and U.K. insurance trade groups were unsuccessful.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)