PRA has published a consultation paper, setting out its proposals to consolidate and formalise existing PRA policy on overseas insurers that write business in the UK through the establishment of a third-country branch. PRA aims to offer more clarity on the expectations on these third-country branches.
The proposals are informed by three key drivers of change:
- The UK’s withdrawal from the EU;
- PRA’s lessons learned in the authorisation and supervision of third-country insurance branches during the TPR; and
- The Solvency II Review, which contains proposals relating to third-country branches.
At a glance, PRA proposes to:
- Introduce a new statement of policy that would replace supervisory statement 2/18 and would set out PRA’s approach to authorising and supervising third-country branches and clarify the PRA’s approach to assessing the risks of a third-country branch in several areas, including “equivalence” of the home country regime and ability to comply with relevant PRA rules, including the SMCR regime;
- Amend SS44/15 to clarify PRA’s existing expectations regarding outsourcing and operational risk, reinsurance counterparty risk, ORSA reporting and systems of governance and SMFs and setting out PRA’s expectations regarding re-domiciliation of the branch undertaking and notification to PRA;
- Amend SS20/16 to clarify PRA’s expectation that third-country branches are within the scope of ss20/16.
Consultation closes on 12 January 2024.