Emma RadmoreShoib Khan has spoken on the PRA’s secondary competitive and growth objective. The main theme of the speech was how the PRA is taking a differentiated supervisory approach for different market segments, which is informed by the respective risks the types of firm present.
In the life sector, a key question is now the increasingly in demand Bulk Purchase Annuity business can support competitiveness and growth. The PRA believes it can, through the insurers’ investment strategies and through corporates focussing on their core business to the benefit of the economy when they transfer pension liabilities to insurers. Also, the reforms to the Matching Adjustment will allow firms to play a bigger role in productive investments. The PRA has a new specialist team to streamline its decision making for Matching Adjustment applications.
The PRA is keeping a close watch on the increase in demand for funded reinsurance in the BPA market, and is looking to mitigate the rapid build up of risks in the sector that could result.
He moved on to discuss other changes, such as the streamlined approach to internal models and greater flexibility in group solvency calculations.
In 2025, the PRA intends to publish firm specific stress test results for major life insurers.
Turning to new entrants to the market. The PRA has authorised 50 insurers since its inception in 2013, and each year approves around 600 individuals within those firms. It has now introduced a “mobilisation” regime that allows new insurers, if they choose, to operate for 12 months with restrictions while they complete their development. The PRA says this model has worked in the banking sector. The PRA has also been working on authorisation and ongoing supervision requirements for third-country insurance branches.
On markets, the London Market remains the dominant market for speciality insurance classes, and specifically the cyber insurance markets.
Looking forwards, the PRA is looking to reform the UK ISPV regime and will also be consulting on an accelerated pathway for catastrophe bond applications – aiming to review complete applications within 10 working days. It is also looking to cooperate more closely with Lloyds on matters such as getting Managing Agents authorised more quickly.