PRA Solvency Exit Planning Requirements – practical implications for insurers

At this market briefing, our guest speakers will shed light on the upcoming PRA requirements for (almost) all insurers to prepare for solvent exit, including practical considerations for designing a Solvent Exit Plan.

Description

The PRA is introducing requirements for insurers to plan for a solvent exit. Most notably, almost all UK insurers will need to produce and maintain a Solvent Exit Analysis (SEA), setting out how they would approach exiting the market – irrespective of how unlikely this might be.

While firms can leverage existing BAU risk management and scenarios to some extent, for most insurers this will be the first time they formally have to consider their exit strategy. Under the PRA’s own cost benefit analysis, the additional work is likely to require 2 FTEs to familiarise themselves with the proposals, conduct a gap analysis, set up internal governance and put together a first SEA.

During this market briefing, our presenters will share insight on the PRA’s upcoming expectations. They will draw on their experience in supporting insurers with recovery and resolution planning to provide practical insight on key challenges including:

• Scenario development: developing scenarios and projections, adapting planning for stressed and non-stressed exit
• Identifying risks and barriers to solvent exit: from mapping legal contracts to considering vulnerable customers, firms will need to set out and potentially address obstacles to resolvability
• Communication: identifying key internal and external stakeholders and how they should be engaged
• Governance and assurance: PRA’s expectations on governance, including designating the responsible SMF

Speakers from KPMG

• Alisa Dolgova, Insurance Prudential Regulation Sector Lead for the EMA Financial Services Regulatory Insight Centre (RIC)
• Matthew McLeod Financial Risk Manager