The Prudential Regulation Authority (PRA) outlines its supervisory priorities for the UK insurance sector for 2026, focusing on financial protection, operational resilience, and market stability. In a letter to insurance CEOs, Gareth Truran, executive director of insurance supervision, and Shoib Khan, director of insurance supervision, say the priorities are set to ensure the sector provides financial protection and security to policyholders “in good times and bad”. Captive insurance regime Advancing its secondary objective to facilitate international competitiveness and growth, the PRA confirms its 2026 priorities include the development of a new UK captive regime. The regulator intends to consult on the new regime in the summer of 2026, with the aim of launching it in 2027. Additionally, the PRA has implemented reforms to its Insurance Special Purpose Vehicles regime to increase the types of insurance-linked securities (ILS) structures available in the UK and streamline the authorisation process. Life and general insurance The regulator highlights several continuing trends, including pressures in the bulk purchase annuity (BPA) market and a softening underwriting cycle in the general insurance market. The PRA says it is paying “particular attention” to the BPA market due to the long-term nature of underwritten risks and increasing competitive pressures. The letter also notes the growing use of funded reinsurance (Funded Re), with a further update on potential policy action expected in the second quarter of 2026. Operational resilience and AI Firms are expected to continue investing in operational resilience while navigating an uncertain environment marked by geopolitical tensions. The PRA notes that while advances in technology, such as artificial intelligence (AI), present opportunities for innovation and operational efficiency, they also amplify existing risks like inaccurate data and cyber threats. Supervisory approach The PRA is planning to transition all firms to a two-year Periodic Summary Meeting (PSM) cycle in 2026. This move aims to reflect the longer-term nature of supervisory workplans and reduce the regulatory burden on firms, supporting the PRA’s secondary objective to facilitate UK competitiveness and growth. Truran and Khan conclude: “We look forward to working with you over the coming year”.
