Recent regulatory developments of interest to insurers and their intermediaries. See also our General regulatory news in the Related Materials links.
- External auditors: PRA CP11/20 on matching adjustment
- COVID-19: FCA sets new commencement date for rules on access to travel insurance
- COVID-19: FCA updates on business interruption insurance test case
- Solvency II: EIOPA launches single rulebook
- COVID-19: EIOPA statement on Solvency II supervisory reporting
- COVID-19: IAIS consults on the impact for the insurance sector
External auditors: PRA CP11/20 on matching adjustment
The UK Prudential Regulation Authority (PRA) has published a consultation paper, CP11/20, setting out its expectations and guidance relating to auditors' work on the matching adjustment (MA). The proposals are intended to increase clarity and transparency on how the MA should be considered as part of the external audit of firms' Solvency and Financial Condition Report (SFCR). The PRA's aim is to ensure clarity both for SFCR users about the extent to which auditors have taken account of the MA in their audit opinions and also for the auditor as to how it should incorporate information about the MA into its overall SFCR opinion.
The proposals would result in changes to the PRA's supervisory statement on Solvency II: external audit of, and responsibilities of the governing body in relation to, the public disclosure requirement (SS11/16). The PRA includes the draft amendments to SS11/16 in an appendix to CP11/20.
The consultation closes on 30 October 2020. The PRA proposes that the draft changes to SS11/16 would be effective for SFCR audits carried out in respect of periods ending on or after 31 December 2020.
COVID-19: FCA sets new commencement date for rules on access to travel insurance
On 27 July 2020, the UK Financial Conduct Authority (FCA) published the COVID-19: Deferral of Commencement (Access to Insurance) Instrument 2020 (FCA 2020/33). The new instrument came into force on 27 July 2020 and changes the commencement date for the policy contained in the Insurance: Conduct of Business Sourcebook (Access to Travel Insurance) Instrument 2020 (FCA 2020/3) to 26 April 2021. The exception is Annex A and Part 1 of Annex B, which came into force on 1 June 2020.
COVID-19: FCA updates on business interruption insurance test case
The FCA has updated its webpage on the High Court business interruption insurance test case publishing the following documents:
The trial has now concluded and judgment is awaited. The FCA advises that the exact date of judgment is not known. Lord Justice Flaux expressed a hope that judgment would be available by the middle of September, although he made clear that this was not a binding indication.
The FCA will update its webpage when the judgment is released and when a final transcript is available.
Solvency II: EIOPA launches single rulebook
The European Insurance and Occupational Pensions Authority (EIOPA) has announced that it has launched its Solvency II single rulebook.
The single rulebook is an online tool that aims to promote the consistent implementation of the Solvency II regulatory framework for insurance supervision. As well as covering the Solvency II Directive (2009/138/EC), it also includes the Solvency II Delegated Regulation (EU) 2015/35, Delegated Regulation (EC) 2016/467, Delegated Regulation (EC) 2018/1221, implementing technical standards, and EIOPA's guidelines, opinions, and supervisory statements.
A user guide is also available.
EIOPA plans to expand the scope of the single rulebook by adding Q&As via its Q&A process.
COVID-19: EIOPA statement on Solvency II supervisory reporting
On 27 July 2020, EIOPA published a statement on Solvency II supervisory reporting in the context of the COVID-19 pandemic. EIOPA uses the statement to explain that insurance and reinsurance undertakings should now start to comply with the deadlines provided in the Solvency II framework. Specifically:
- insurance and reinsurance undertakings are expected to report a calculation (if it is available as of reference date), or an estimate, of the solvency capital requirement at the end of each quarter reference date instead of the last calculated one. The Solvency II quarterly own funds template with a reference date between 30 June and 31 December 2020 should be used; and
- national competent authorities are requested to submit information received quarterly to EIOPA no later than two weeks upon receipt.
This follows EIOPA publishing recommendations on supervisory flexibility regarding the deadline of supervisory reporting and public disclosure by insurers in March 2020.
COVID-19: IAIS consults on the impact for the insurance sector
On 24 July 2020, the International Association of Insurance Supervisors (IAIS) published a consultation on the impact of the COVID-19 pandemic on the insurance sector, supervisors and the future work of the IAIS.
The consultation closes on 28 August 2020.