International Association of Insurance Supervisors
IAIS annual general meeting and conference - Summary made available -19 November 2021
The International Association of Insurance Supervisors (IAIS) has published a press release summarising its 28th annual general meeting and conference, held virtually. Among the matters discussed were the status of the design of the insurance capital standard (ICS) and the comparability assessment of the Aggregation Method; the IAIS’s commitment to help accelerate supervisory responses to climate change; and the importance of diversity, equality and inclusion considerations to insurance supervisory objectives
Press release: IAIS 28th AGM and Annual Conference reflect on key achievements in advancing IAIS Strategic Plan 2020-2014 and focus on evolving trends impacting the insurance sector
European Insurance and Occupational Pensions Authority
Solvency II - EIOPA publishes annual report on capital add-ons - 22 November 2021
The European Insurance and Occupational Pensions Authority (EIOPA) has published its annual report on the use of capital add-ons (CAOs) by national competent authorities (NCAs) under the Solvency II Directive (2009/138/EC). During 2020 a total of seven NCAs imposed CAOs on nine solo undertakings (six non-life and three life undertakings). As was the case in 2019, no CAOs were imposed for groups.
Report on the use of capital add-ons during 2020
Press release
Prudential Regulation Authority
Solvency II review - PRA publishes speech - 25 November 2021
The PRA has published a speech by Charlotte Gerken, executive director, insurance, on the PRA’s role in the review of the Solvency II regime. Speaking at the 2021 Insurance Asset Management Conference, Ms Gerken focuses on the opportunity to consider reforms that will promote investments by insurers in the emerging green economy.
Ms Gerken suggested that the following changes to the Solvency II regime, among others, may be considered:
- amendments to matching adjustment (MA) criteria so that certain infrastructure assets, including green infrastructure, are caught;
- reforms to the regime for approving internal models, to allow firms greater flexibility to use forward-looking assessments of risk which are more able to take into account climate risk;
- clarifying the PRA’s liquidity expectations with respect to certain construction phase assets, in order to allow firms to invest productively rather than holding cash or gilts; and
- streamlining the PRA’s application process for MA portfolio changes.
Ms Gerken also remarked that the PRA is looking to facilitate competition in the insurance sector by easing entry.
In the coming months, the PRA will analyse the results of its quantitative impact study and qualitative questionnaire and will discuss the firms’ responses with them. Reform proposals will be drawn up in conjunction with HM Treasury and brought to consultation in 2022.
The PRA’s role in improving the processes that support insurers’ investment - speech by Charlotte Gerken
Financial Conduct Authority
General insurance pricing practices - FCA updates webpage with forms - 19 November 2021
The FCA has updated its webpage on Policy Statement PS21/11 regarding general insurance pricing practices. PS21/11 made minor changes to the rules set out in PS21/5. PS21/5 sets out the requirement for senior managers to provide annual confirmation that their firm has complied with the requirements in the Insurance Conduct of Business sourcebook (ICOBS) 6B.2.60R. The aim of this requirement is to help the FCA hold firms and individuals to account for ending price walking for home and motor insurance. The updated webpage includes examples of the forms that senior managers will need to use, as well as a template cover letter.
FCA updated webpage on PS21/11: General insurance pricing practices – amendments
Form: First annual attestation on GI pricing rules
Form: Second and subsequent attestation on GI pricing rules
Cover letter: Compliance with ICOBS 6B Attestation
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Non-workplace pensions - FCA publishes consultation paper (CP21/32) -25 November 2021
The FCA has published a consultation paper (CP21/32) on improving outcomes in non-workplace pensions (NWPs). Currently, NWP customers must choose their own investments from an increasingly wide range of options. The proposals detailed in the consultation paper aim to ensure that customers who choose not to take financial advice can benefit from a professionally designed investment strategy, and reduce the risk of their retirement income being eroded by inflation.
The proposals follow the FCA’s discussion paper (DP18/1) on effective competition in NWPs, published on 2 February 2018. They are intended to implement some of the remedies outlined in the PRA’s feedback statement (FS19/5), published on 30 July 2019.
Under the proposals, the ‘default option’ would be an appropriately diversified basket of investments that take into account climate change and other environmental, social and governance (ESG) risks. As customers approach retirement, these investments would be adjusted to limit market impacts on customers’ savings. The consultation paper also details proposals for NWP providers to warn customers holding high levels of cash and prompt them to consider investing in other assets with the potential for growth.
The FCA consultation closes on 18 February 2022. The FCA intends to publish a policy statement and Handbook rules in 2022. It proposes to give providers 12 months to implement the proposals and will carry out a post-implementation review no earlier than 2024.
FCA Consultation Paper: Improving outcomes in non-workplace pensions (CP21/32)
Press release
