The UK Government has revealed it will bring forward a review of certain features of Solvency II, according to a statement from Rishi Sunak, the chancellor of the exchequer.
On 23 June, Sunak confirmed several major updates to the UK’s Brexit plans for adopting EU rules frameworks in a written statement.
In the statement, Sunak announced that the UK government plans to bring forward a review of certain features of Solvency II to ensure that it is properly tailored to take account of the structural features of the UK insurance sector.
The Solvency II directive, which came into effect on 1 January 2016, is an EU law that codifies and harmonises the EU insurance regulation. As part of EU regulation, the UK had to adopt and follow the EU’s Solvency II rules for their insurance market, including captive insurances.
The EU is currently undertaking a review of Solvency II, however, due to COVID-19, the European Insurance and Occupational Pensions Authority (EIOPA) extended the deadline of the holistic impact assessment for the 2020 Solvency II Review by two months, to 1 June 2020.
The UK Government's review of the framework will consider areas that have been the subject of long-standing discussion while the UK was a member state, some of which may also form part of the EU’s intended review.
Sunak outlined that these will include, but are not limited to, the risk margin, the matching adjustment, the operation of internal models and reporting requirements for insurers.
The government is expected to publish a call for evidence in Autumn 2020.
