In March, the European Insurance and Occupational Pensions Authority (EIOPA) published its recommendations on the implications of COVID-19 for supervisory reporting and financial disclosure. EIOPA recommended that insurers consider the pandemic as a “major development” and publish appropriate information in their Solvency and Financial Condition Reports (SFCRs) on the effect of COVID-19 on their business.
However, EIOPA did not prescribe the possible format or extent of such disclosure. As a result, different approaches were taken by insurers to meet the disclosure requirements. They ranged from having dedicated sections for the impact of COVID-19 to having a few lines giving a brief description of the potential impact at much higher levels.
In this paper, Milliman’s Paul Fulcher, Sihong Zhu, and Samuel Burgess review the SFCRs recently published by major life insurers in the United Kingdom to examine the disclosures made on the impact of COVID-19 and what can be learnt about the impact the epidemic has had.
In June, the Prudential Regulation Authority (PRA) published its feedback to general and life insurers following their participation in the Insurance Stress Test (IST) 2019 exercise and the more recent stress test exercise specific to COVID-19.
IST 2019 was the third IST conducted by the PRA since the introduction of Solvency II. However, IST 2019 was the first in which UK life insurers participated (the first two tests being restricted to general insurers) and only life insurers with significant annuity exposures were invited to participate.
This paper by Milliman professionals summarises the key feedback from the PRA and discusses the expected implications for life insurers in the United Kingdom over the course of 2020 and beyond.
In May, the Prudential Regulation Authority (PRA) published Supervisory Statement (SS) 1/20 on its latest expectations of the application of the Solvency II (SII) Prudent Person Principle (PPP) rules to insurers’ investment strategy, risk management and governance.
The SII PPP requires insurers to conduct investment activities in an appropriate manner, and to only invest in asset risks which they can properly identify, measure, monitor, control and report, and which are in the best interest of policyholders. The importance of this has been highlighted by the increased trend towards investment in less liquid and more complex assets as well as recent economic volatility.
This paper by Milliman’s Paul Fulcher and Sihong Zhu summarises the key PPP expectations from the updated text in the SS and their potential implications for insurers.