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Rules on Solvency II published by PRA.

BANKING AND CREDIT NEWS-March 23, 2015-Rules on Solvency II published by PRA

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The Bank of England on Friday revealed that the Prudential Regulation Authority (PRA) has published its final rules setting out how it will implement the Solvency II Directive (Solvency II) in the UK.

Solvency II is intended to establish a consistent and coherent solvency framework for insurers across Europe and plans on providing better protection to policyholders by reducing the probability of an insurance firm failure.

The policy statement establishes how the PRA will implement the "long term guarantees package", with insurers able to reduce the level of risk on some types of long-term liabilities. As well as publishing the final rules, the PRA also published a consultation paper on the application process for the "volatility adjustment", an adjustment to the Solvency II risk-free discount rate which will be used to value insurance liabilities.

Deputy governor, Prudential Regulation, Bank of England and CEO of the PRA, Andrew Bailey, commented "Solvency II represents a fundamental change in the way that insurers are regulated. The papers published today provide clarity for UK firms on how the PRA will implement the new regime - acting in the interests of the wider economy and ensuring an appropriate level of policyholder protection. These publications will allow firms to finalise their preparations for Solvency II in order to be ready for the start of the regime on 1 January 2016."

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Publication:M2 Banking & Credit News (BCN)
Date:Mar 23, 2015
Words:254
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