PRA finalises new Solvency UK framework

The PRA published two policy statements, on 28 February and 29 February 2024, setting out final Solvency UK rules (PS2/24, PS3/24). The PRA confirms relatively minor changes to the proposals it set out in its earlier consultations.

Overall, the PRA expects the new Solvency UK regime will simplify some requirements, allow improved flexibility, and encourage entry into the UK insurance market. The PRA considers that its new rules will continue to maintain strong prudential standards for the UK insurance sector while allowing a meaningful reduction to the existing administrative and reporting requirements to decrease compliance costs and reduce regulatory complexity.

Insurers must implement the changes confirmed in the policy statements by 31 December 2024. While these policy statements do not cover changes to the matching adjustment (MA) which were consulted in CP19/23, the PRA confirms it is still planning to have final policy on the MA in place by the end of June 2024.