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Insurers’ guide to responding to the PRA

Insurers’ guide to responding to the PRA

Our helpful step-by-step guide outlines key information and planning considerations to form the PRA response.



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On 7 April, Mark Carney the Governor of the Bank of England, made a speech on assurance over industry contingency plans for Brexit.

The speech was followed by a letter directing relevant institutions to produce a scenario based contingency plan to be ratified by local senior management and returned to the regulator by 14 July 2017, 5pm.

In order to help you respond to the PRA response, we have listed below, some key information and planning considerations.

Why is this information being requested

  • Information on contingency plans will provide the PRA with insight into insurers’ intentions and help them assess the likely impact on the sector if a “Hard Brexit” were to materialise. 
  • The PRA will also use the responses to help shape their own contingency plan. 
  • The FPC will consider the responses from a financial stability perspective.

Who needs to respond

  • Insurers (and banks, and designated investment firms) undertaking cross-border activities between the UK and the rest of the EU are in scope. 
  • UK insurers using passporting licences (both branches and freedom of services) to write insurance business in the rest of the EEA and EEA insurers using passporting licences to write business in the UK. 
  • Groups with significant personal lines business as they may attract greater scrutiny.
  • Insurers writing policies where there is less substitutability available in the market.

Scenario planning

  • The PRA letter makes it clear that insurers should be planning on a “worst case” basis and should look at a wide range of possible scenarios. 
  • Inbound insurers should consider possible authorisation of their UK branch (to apply from the point of Brexit), establishment of a UK authorised insurer and exiting the UK market (possibly with remote run-off of existing policies). 
  • Outbound insurers should consider authorisation of a new insurer elsewhere in the EEA to carry out their EEA business and where best to locate that company.

Existing policies

  • The ability to service existing contracts sold on a cross-border basis pre-Brexit (the back book) after exit is a key concern that needs to be covered. 
  • A key question is whether it will be legal for UK and EEA insurers to service these contracts post-Brexit remotely without local authorisation. 
  • Certainty can be assured by transferring existing EEA policies to the new EEA insurer but this is time consuming and expensive. Although insurers are hoping for a transitional solution to deal with this issue, groups need to include this within the range of possible scenarios covered.

Planning considerations

  • Location of a new EU insurer (if required). 
  • Method of transition to new operating structure including proposals for the back book. 
  • New authorisations or approvals required (especially from PRA but also EEA) and regulatory approvals/ dependencies. 
  • Timeline including time required to obtain new authorisations. 
  • Tax and legal implications (where identified). 
  • Overview of revised operating model. 
  • Key dependencies and any secondary.

If you would like to discuss any of the above in further detail please email Janine Hawes or Michael Tagg.  

© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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