Solvency II updates – exemptions and approvals

On 20 March 2015, the Prudential Regulation Authority (PRA) published a whopping 15 Solvency II related supervisory statements! Among these were statements on:

• applying for exemptions from some of the quarterly reporting, and  
• other approvals that firms may wish to apply for.

This blog outlines the key points from these two statements.

SS11/15¹ Solvency II: regulatory reporting and exemptions 

This statement outlines the reporting requirements that firms can apply for exemption from and the process for making an application for these exemptions.

Key points

• quarterly reporting exemptions may be granted where ‘submission of that information would be overly burdensome in relation to the nature, scale and complexity of the risks inherent in the business of the undertaking’
• this exemption is only available to firms that cumulatively represent less than 20% of a Member State’s life and non-life insurance and reinsurance market shares respectively
• the PRA considers firms they have classified as category 4 or 5 may meet the requirements of exemption from quarterly reporting
• other categories may be exempt but these would be considered on a case-by-case basis
• if granted exemptions, the quarterly forms that would be required are:

(Source: SS11/15)

Action

• firms who think they are eligible should discuss with supervisor before submitting the application
• application requires completing a questionnaire published on the Bank of England website
• applications are due by Tuesday 1 September 2015
• if approved a Directors letter will be sent to the firm detailing the duration of the exemption

SS15/15² Solvency II: approvals

This statement sets out the PRA’s expectations of firms in gaining other Solvency II approvals. For each of the following, it briefly sets out what the approvals are, where they are appropriate and the information required in the application.

• internal model
• matching adjustment
• ancillary own funds
• undertaking specific parameters
• exclusion of entity from scope of group supervision
• single group ORSA
• SFCR dispensation
• calcualation method for group solvency capital requirement

Action

• firms can submit applications to the PRA for Solvency II approvals from 1 April 2015
• there is no set deadline for applications to be received, although, the PRA has recently contacted firms for an updated view of which approvals they intend to apply form and when they expect to submit an application, this is intended to assist the PRA with its planning and we may see some deadlines once they have received these updates from firms

Application checklists are available for the majority of the approvals.

¹ http://www.bankofengland.co.uk/pra/Pages/publications/ss/2015/ss1115.aspx

² http://www.bankofengland.co.uk/pra/Pages/publications/ss/2015/ss1515.aspx