Beyond Brexit

Prudential Regulation Authority

Responsible openness in the insurance sector - PRA publishes speech by PRA Executive Director - 25 May 2021

The PRA has published a speech by PRA Executive Director, Anna Sweeney, on responsible openness in the insurance sector. The speech covers how the PRA aims to regulate insurance services following the UK’s departure from the EU, facilitating competition, and the UK’s role in setting international standards on issues such as climate change. Points of interest include:

• the PRA is remaining open to all insurers seeking to operate in the UK, and will assess applications against a clear and consistent set of criteria. This includes hosting business on a cross-border basis both from the EU and more broadly, provided that the PRA is satisfied that the level of ‘supervisability’ of the EU branch and its parent entity is commensurate to the level of potential risk it poses to the PRA’s statutory objectives;
• the PRA observes that branch hosting provides a relatively low cost, low impact route for overseas insurers seeking to operate in the UK;
• the PRA is aiming to rationalise the requirements branches are subject to, including considering the removal of branch capital requirements as part of the UK Solvency II Directive (2009/138/EC) review, while ensuring that insurance branches are not held to lower standards than insurers based in the UK; and
• the PRA is considering ways in which the process of obtaining authorisation for new insurers can be made more efficient while still ensuring prudential standards, observing that an unnecessarily prolonged application process can itself be a barrier to attracting new entrants to the UK market.

Speech by PRA Executive Director, Anna Sweeney: Responsible openness in the insurance sector