The Solvency II Directive and its impact on the UK Insurance Industry Contents

Contents

Terms of Reference

Summary

1 Introduction

Background to the insurance industry

Background to Solvency II and this Report

Evidence

2 The remit, objectives, and skills of the PRA

The PRA’s remit from the Chancellor

Industry recognition of the PRA’s strengths

The objectives of the Prudential Regulation Authority

3 Solvency II and the way it has been implemented in the UK

The Strengths of Solvency II

Significant improvements can be made

Specific suggestions for improvement

4 Financial stability and market distortions

Procyclicality and Regulatory Forbearance

5 Effect on long term savings and investment

Industry Concerns

The Regulator’s View

6 Risk Margin

Industry Concerns

The Regulator’s View

7 Proportionality

The Standard Formula and the Process for Approving Internal Models

Shortcomings of the Solvency II regime

Model validation and approval

The approach to data requirements

Shortcomings of the Solvency II regime

Regulatory view

8 Other technical matters

Volatility Adjustment

Shortcomings of the Solvency II regime

Regulatory view

The Transitional Measure on Technical Provisions

Shortcomings of the Solvency II regime

Contract Boundaries

One year value at risk

9 Brexit

Background

Passporting and Equivalence

Complications

Opportunities

Conclusions and recommendations

Formal Minutes

Witnesses

Published written evidence

List of Reports from the Committee during the current Parliament





25 October 2017