Insurance Europe’s Reinsurance Advisory Board (RAB) has responded to a consultation conducted by the UK Prudential Regulation Authority (PRA) on its proposed changes to Solvency II reporting requirements and expectations in the UK market. Such changes are relevant for several EU reinsurers with third-country branch undertakings in the UK or firms within the PRA’s Temporary Permissions Regime (TPR).
The RAB outlined several adjustments that aim to ensure that the proposed requirements appropriately capture the specific characteristics of reinsurance activities, while maintaining the principle of fair competition in and equal access to the UK market.
The RAB also stressed that EEA reinsurers are subject to domestic rules equivalent to those in the UK, and so do not gain any advantage over any UK-based reinsurers in their capital and reporting requirements.
Her Majesty’s Treasury (HMT) is currently reviewing Solvency II rules for (re)insurers operating in the UK. The transitional relief period offered to EU firms operating in the TPR will, however, come to an end before a decision is made by the HMT on changes to the UK Solvency II regime and incorporated into law. The PRA should therefore consider the specific treatment of reinsurance ahead of the end of the transitional relief period or to extend it until the outcome of HMT’s review is known and implemented.
This would avoid firms having to implement a number of reporting requirements that may then cease to apply or need to be modified, some of which that are, in the RAB’s view, not suitable for reinsurance in any case. It would also remove the need for firms to apply for waivers or modifications of the reporting rules, as well as the requirement for the PRA assess any such applications.