Reports on recent UK and EU regulatory developments of interest to insurers and their intermediaries.
- Solvency II: PRA supervisory disclosures
- Solvency II: EIOPA opinion on supervising use of climate change risk scenarios in OSRA
- COVID-19: FCA BI insurance calculator
Solvency II: PRA supervisory disclosures
The UK Prudential Regulation Authority (PRA) has published Solvency II: Supervisory disclosures, PRA’s supervisory approach and insurance regulations applicable in the UK year-end 2019 in line with its obligations under Article 31(2) of the Solvency II Directive. The disclosures include:
- aggregate statistical data on key aspects of the application of the prudential framework;
- a table covering the manner of exercise of the options provided for in the Solvency II Directive;
- links to the texts of insurance regulations applicable in the UK; and
- links to the PRA’s supervisory approach.
The PRA states that the disclosure is designed to foster a uniform level of transparency and accountability between supervisory authorities and will be of primary interest to PRA-authorised insurance companies.
Solvency II: EIOPA opinion on supervising use of climate change risk scenarios in OSRA
Following its October 2020 consultation, the European Insurance and Occupational Pensions Authority (EIOPA) has published an opinion addressed to national supervisory authorities on the supervision of the use of climate change risk scenarios in the own risk and solvency assessment (ORSA). In its opinion, EIOPA sets out expectations on the supervision of the integration of climate change risk scenarios by insurers in their ORSA.
EIOPA explains that the insurance and reinsurance industry will be impacted by climate change-related physical and transition risks. However, only a minority of insurers currently assess climate change risks in the ORSA, usually on a short-term basis. Therefore, EIOPA considers it essential to foster a forward-looking management of these risks to ensure the long-term solvency and viability of the industry.
COVID-19: FCA BI insurance calculator
The Financial Conduct Authority (FCA) has published a calculator to assist business interruption (BI) insurance policyholders in proving the presence of COVID-19 in their policy area. It has also published instructions for its use. The FCA committed to publishing the calculator in March 2021 when it published its final guidance on providing the presence of COVID-19 for the purpose of BI insurance claims. The purpose of the calculator is to help policyholders carry out the calculations in chapters 7, 8 and 9 of the final guidance. The results can be used to support a claim under a BI insurance policy.
The FCA has updated its webpage on the final guidance, as well as its webpage on BI insurance, to provide a link to the calculator.