[Insurance] PRA issues consultation paper on Solvency II approvals

This includes:

• internal model;
• matching adjustment, ancillary own funds and undertaking specific parameters;
• exclusion of an entity from the scope of group supervision;
• single group ORSA;
• SFCR dispensation; and
• calculation method for the group solvency capital requirement.

Internal model applications

Internal model firms should pay particular attention to the PRA’s proposals on submitting the formal internal model application.  The PRA will require all firms to complete the EIOPA application templates in place of the PRA’s existing self assessment template (SAT). This will require firms to transpose all of the information currently recorded in the SAT to the EIOPA template, the contents of which have not yet been published.

Pre-application process for the matching adjustment

The consultation paper also provides details on the PRA’s pre-application process for the matching adjustment which runs from 1 December 2014 to 6 January 2015. Participation in this process is not mandatory but the PRA are strongly encouraging firms to participate to reduce the risk of applications being refused in the formal application stage.

Consultations deferred

The PRA has deferred consultation on other Solvency II approvals to November 2014, these include:

• transitional measure on technical provisions;
• transitional measure on the risk-free interest rate; and
• volatility adjustment.

Next steps

Firm’s expecting to apply for any of the Solvency II approvals listed above should read the proposals relevant to them, comments must be provided to the PRA by Friday 9 January 2015.