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ABI comments on PRA announcements

The ABI's Assistant Director for Prudential Regulation, Steven Findlay, said the following on the PRA consultation paper and supervisory statement published today. 

On the PRA consultation paper on Solvency II: Monitoring model drift and standard formula SCR reporting for firms with an approved internal model:
Steven Findlay“The ABI is concerned about the proposals to monitor model drift for internal model firms. It is important they do not become an implicit early warning indicator framework.  As Solvency II beds down, supervisory convergence should be the watch word and if introduced, any requirements like these should consistent across Europe.”

“Insurers already have model change policies in place which have been agreed with the PRA and the regulator will be involved in any future changes to models. Any upwards model drift should be avoided.”


On the PRA supervisory statement on the recalculation of the transitional measure on technical provisions under Solvency II: 

“There are many helpful clarifications in this final supervisory statement which reflects our feedback to the PRA during the consultation period. In particular, we welcome the proportionate approach to be taken to the calculation and that the double run-off effect will be avoided. 
“It is important we have had confirmation that firms can seek recalculation, on their own initiative, whenever there has been a material change in risk profile. This should ensure that firms can recalculate the transitional measure on technical provisions based on their specific circumstances - even if the PRA's indicative thresholds have not all been breached.” 

Last updated 01/07/2016