Sam Woods, the PRA’s Deputy Governor and CEO, has published a letter addressed to the Treasury Committee on EU insurance regulation. The letter is a preliminary response to requests by the Committee for further evidence on the following:
- the PRA’s view in relation to the 23 areas recommended by the Association of British Insurers (ABI) for reform; and
- the PRA’s plans to consider further the costs and benefits of reporting requirement.
To assist the Prudential Regulation Committee, which will be required to consider the issues in full, the letter highlights areas where Sam Woods:
- is open to reform and will explore options with the ABI;
- shares some concerns but does not necessarily agree with the ABI’s prescription; and
- disagrees with the ABI.
Sam Woods comments that although the fundamental regime of Solvency II is sensible there are adjustments that need to be made to address issues such as the design of the Risk Margin being excessively volatile due to its sensitivity to risk-free interest rates. The PRA also plans to review its implementation of Solvency II reporting requirements.