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Brexit and Solvency II: The Story So Far

In the light of the June 2016 Brexit vote, the UK Treasury Select Committee (TSC) opened an inquiry into the operation of Solvency II (SII) in the UK. The inquiry wanted to understand the strengths and weaknesses of SII in its existing form, together with exploring the options open to the UK insurance industry following the Brexit vote. 

The inquiry was – and remains - a real opportunity for the IFoA to influence this debate. The IFoA submitted a comprehensive written response on 11 November; a copy of it can be found here: IFoA response. A number of Practice Boards were heavily involved in putting it together, including the Life and General Insurance Boards, as well as the Retrospective on Solvency II Working Party, amongst others. Our thanks go to all the Boards, Committees, Working Parties and individual members who contributed to this important debate. 

The TSC published a number of the written responses they received, and we have produced a summary of a selection of these responses. Note that the summary is based on our own interpretation of these written submissions: IFoA Summary

IFoA Oral Evidence

Following our written evidence, the TSC invited the IFoA to provide supplementary oral evidence. Andrew Chamberlain, Chair of the Life Board, gave evidence on behalf of the IFoA on 17 January 2017, together with representatives from PWC and KPMG. 

Themes explored by the TSC at this meeting included the suitability of SII for the UK market, whether the PRA should have competition as a primary objective, and the wider impact of measures such as the Matching and Volatility Adjustments and the Risk Margin.  Our evidence focussed on the impact of SII from a public interest perspective, including the balance between policyholder security and policyholder value for money. The meeting went well and the TSC were left with a clear idea of some of the impacts of SII and potential solutions to address them. A video of this session can be found here – IFoA/TSC video - and the corresponding IFoA/ TSC transcript. 

We followed-up on our appearance with a brief letter summarising some of the issues/ potential changes which could be made to SII in the UK: Summary of SII Changes.  

The TSC had a subsequent session with further respondents on 25 January 2017, and the corresponding video / transcript can be found here: 25 Jan video25 Jan transcript.

TSC Sessional Event

The week after our attendance at the TSC, we held the first ever dual-site live sessional event in the IFoA’s history. The event drew together IFoA working parties at Staple Inn and Edinburgh on 23 January, and featured a live video feed between both sites and on-site presentation and discussion. 

The sessional meeting started with a debrief from Andrew Chamberlain on our evidence to the TSC, including the wider context to the Committee.  There then followed updates from two Working Parties relevant to the themes of the TSC inquiry (Retrospective on Solvency II and Transitional Measure on Technical Provisions). The event closed with a Q&A session live from both sites.

The meeting was a success, and the IFoA hopes to replicate this dual-site model in the future. Our thanks go to Andrew Chamberlain, the two sessional Chairs and both Working Parties for presenting on the night. A video of the sessional meeting will be added to this site when available. 

Next Steps

The TSC is a particularly influential committee, and Government departments, notably HM Treasury, are likely to consider carefully what the TSC have to say. We will be monitoring developments with the TSC carefully, and hope to have further IFoA input on the ongoing evolution of insurance regulation in the UK.

We will update this page as the debate progress. 

Resources
Title Date
IFoA summary and analysis - TSC Solvency II Inquiry 31 January 2017
Insurance industry evidence to the Treasury Select Committee Solvency II Inquiry: 25 January 2017
Summary of Solvency II changes 17 January 2017
IFoA evidence to the Treasury Select Committee Solvency II Inquiry: 17 January 2017
IFoA response to TSC Solvency II Inquiry 11 November 2016

Contact Details

Policy Team

policy@actuaries.org.uk

IFoA, 7th Floor, Holborn Gate, 326 – 330 High Holborn, WC1V 7PP

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Events calendar

  • IFoA Joint Member Event with the Sunshine Insurance Group, Beijing China

    Room TBC, Kuntai International Plaza, No.12, Chaowai Street, Chaoyang District, Beijing 地址:会议室待定,北京市朝阳区朝外大街乙12号1号楼昆泰国际大厦
    12 December 2019

    Spaces available

    The IFoA’s President-elect Tan Suee Chieh will visit Beijing. We will co-host CPD and Awards Presenting event with the Sunshine Insurance Group on Thursday 12 December 2019. The event is part of Mr Tan’s first presidential trip to China.

  • ARC Sessional Research Event: Drivers of Mortality - Risk Factors and Inequality

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    6 January 2020

    Spaces available

    The authors will focus on a large dataset obtained from the UK’s Office for National Statistics (ONS) and related sources. Data are available at the level of Lower Super Output Areas (LSOAs) – small geographical areas with, typically, 1000-2000 residents and include death counts, exposures and a significant number of socio-economic variables including the index of multiple deprivation (IMD).

  • SIAS Event: My Journey to Data Science, Big Data and AI

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    7 January 2020

    Spaces available

    Patrick Lee is an actuary who has made the transition to working in software architecture and artificial intelligence (AI). He holds Microsoft Professional qualifications in Data Science, Big Data and AI and is currently working towards a DevOps (the automation of software testing and deployment) qualification. He is a member of the IFoA Council and is also President of the Wessex Actuarial Society. He is also a member of the IFoA and the RSS's joint Data Science Focus Group and will talk on the ethical use of AI. 

  • Spaces available

    This IFoA event for NEDs explores what skills and experience are required to undertake non-executive roles, e.g. as independent NEDs on fund boards or members of IGCs. The event will be chaired by Brandon Horwitz, an actuary who is a consultant and who has held various investment governance roles and who specialises in investment governance as well as being an iNED.

  • Spaces available

    This presentation covers the detail for how the matching adjustment is calculated. A small simple example spreadsheet is provided and discussed in detail.

    For actuaries wanting to get more involved with the matching adjustment, this is the opportunity to get a detailed description of the mechanics involved. This includes cashflows derisking, PRA tests as well as hypothecation.

    The presentation is provided by James Sharpe who has worked on a number of matching adjustment calculations with several firms.

  • IFoA Volunteer Recognition Reception

    Staple Inn, 4 High Holborn, Holborn, London WC1V 6DR, UK
    15 January 2020

    Spaces available

    As a thank you to all our Institute and Faculty of Actuaries (IFoA) volunteers, you are invited to join us at Staple Inn Hall, for an evening of drinks, canapes and networking, in London.

    IFoA President, John Taylor, will be attending and will make a speech

    If you support the IFoA as a volunteer (member or non-member), or in any other role, and you are going to be in London on 15 January, please book your place and join us at this reception.

     

  • Sessional Meeting - Operational Risk Dependencies

    Royal College of Physicians of Edinburgh 9 Queen St Edinburgh EH2 1JQ
    20 January 2020

    Spaces available

    The Operational Risk Working Party aims to assist actuaries and others in the modelling and management of operational risk. One of the key challenges in modelling operational risk is the modelling of dependencies between operational risks, and between operational and non-operational risks such as market, credit and insurance risk. Their paper seeks to assist in this regard, and help develop good practice in setting assumptions and modelling operational risk dependencies. 

  • KSS event in Glasgow: Public Sector Pensions

    Hymans Robertson, Glasgow 20 Waterloo St, Glasgow
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin will present this talk on 30 January in Glasgow, Stirling and Edinburgh. If you wish to register for another location please return to the Events Calendar.

  • KSS event in Stirling: Public Sector Pensions

    M&G Prudential, Stirling Craigforth Campus, Stirling
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin will present this talk on 30 January in Glasgow, Stirling and Edinburgh. If you wish to register for another location please return to the Events Calendar.

  • KSS event in Edinburgh: Public Sector Pensions

    Hymans Robertson 1, Exchange Place, Semple St, Edinburgh
    30 January 2020

    Spaces available

    – the unappreciated key assumption, the resulting unsustainable promises, the unmanaged risk and the unrecognised debt? 

    Speaker: Allan Martin will present this talk on 30 January in Glasgow, Stirling and Edinburgh. If you wish to register for another location please return to the Events Calendar.

  • The Great Risk Transfer – Breakfast briefing and launch event

    Staple Inn Hall, High Holborn London WC1V 7QJ
    31 January 2020

    Spaces available

    Launch of the IFoA’s 2020 thought leadership campaign The Great Risk Transfer. The campaign will examine the trend of the transfer of risk from institutions to individuals, and how people can be better equipped to manage the financial risks they now face. At this breakfast event the IFoA will launch a call for evidence on this topic.

  • Professional Skills Training - London (11 February 2020)

    Staple Inn, High Holborn, London WC1V 7QJ         
    11 February 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Sessional: Impact of E-cigarettes Working Party

    Royal College of Physicians, 9 Queen St, Edinburgh EH2 1JQ
    24 February 2020

    Spaces available

    This sessional meeting will be of direct interest to actuaries and others working in the in the Health and Care, Life or Pensions sectors or indeed actuaries with an interest in morbidity or mortality. Note: Registration is from 17.30 in time for the sessional to begin at 18.00.

  • Professional Skills Training - Edinburgh (25 February 2020)

    IFoA (Edinburgh), Level 2, Exchange Crescent 7 Conference Square Edinburgh EH3 8RA
    25 February 2020

    Spaces available

    A Trusted Profession

    A 2 hour CPD event designed to meet the IFoA’s Stage 3 Professional Skills Training under the IFoA’s CPD Scheme 2019/2020This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Pensions, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Spring Lecture 2020, Edinburgh - Vicky Pryce

    Assembly Rooms, 54 George St, Edinburgh EH2 2LR
    25 March 2020

    Spaces available

    What next in Economic Policy?

    Please join us on 25 March 2020 for our annual Spring Lecture presented by Vicky Pryce in Edinburgh. 

  • IFoA Asia Conference 2020, Kuala Lumpur

    CCEC Nexus, 7, Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia
    24-25 June 2020
    Spaces available

    The sixth annual Asia Conference once again offers a prestigious line-up of home and international speakers discussing the insurance and financial industry’s innovation and change in Asia. This year's conference in Kuala Lumpur will be hosted by Tan Suee Chieh, IFoA’s first Asian President. He will also make his Presidential address at this conference and will expand on the important elements of IFoA’s new strategy. 

    Additionally, this landmark conference will showcase how the IFoA is reinventing itself to support its members to succeed and thrive in a digital age, within traditional businesses and beyond, as a global organisation. 

    Not to be missed by international industry players, opinion formers, academic and industry leaders, actuaries and non-actuaries.