You are here

Brexit and Solvency II: The Story So Far

Although 2016 was better known for the UK’s Brexit referendum, 1 January 2016 was the ‘switch-on’ date for Solvency II. Even on its introduction, there was the expectation that the new insurance prudential regulatory framework would evolve after it bedded-in. However, not long after the Brexit referendum, the influential House of Commons Treasury Committee opened an inquiry into the operation of Solvency II in the UK. The inquiry looked to understand the strengths and weaknesses of Solvency II in its then form, together with exploring the options open to the UK wider insurance industry following the Brexit vote.

The IFoA promptly submitted a comprehensive and pragmatic response to the Treasury Committee in late 2016, with our perspective framed by what was in the public interest. We were subsequently invited to provide supplementary oral evidence, which was the start of deepening IFoA engagement with the Committee, as their Solvency II inquiry progressed.

Along the way, political developments at Westminster including the 2017 General Election saw the Treasury Committee’s inquiry paused. Post re-boot, reform of Solvency II remained a priority for the Committee, and they subsequently concluded their inquiry in late 2017. Amongst others areas, they called for revamp of some of the more contentious aspects of regulatory regime, including the risk margin, matching adjustment, internal model processes and transitional measures on technical provisions.

Whilst Solvency II was on the political radar at Westminster, evolution and clarification on the operation of Solvency II was emerging, from both the PRA and EIOPA, much through consultation with industry. Topics tackled through consultation – and on which the IFoA responded - included the matching adjustment, its application to equity release mortgages, the volatility adjustment and reducing the burden of financial reporting.

Fast forward to late 2020, and the UK’s transitional arrangement with the EU post-Brexit is about to draw to a close. Amongst the many aspects of the UK’s future post Brexit trajectory to be determined, and despite the wider turmoil arising due to the COVID-19 pandemic, Solvency II had returned to the UK Government’s radar. This time, HM Treasury (HMT) have opened a Call for Evidence on their review of Solvency II in the UK.

The HMT review builds on the work of the earlier Treasury Committee inquiry, and revisits aspects of Solvency II which featured prominently in that earlier work, but also debated much more widely; the risk margin and matching adjustment amongst others. Given the close of the transitional period is now a near-reality, HMT’s review has a strong flavour of making the UK’s insurance regulation fit for UK specifics, but also as an enabler of competition and innovation. Interestingly, HMT’s inquiry also seeks to understand how Solvency II can facilitate capital investment in infrastructure, without losing sight of the need for adequate policyholder protection. And in a sign of our times, the inquiry also has a strong green dimension, and is interested in how Solvency II can support UK government climate change objectives.

The IFoA will also be building on our past work on the evolution of Solvency II. We are drafting a cross-practice, comprehensive and pragmatic response to HMT’s call for evidence, at the time of writing. As before, this will have the public interest as its reference point, and we also plan to develop our engagement with HMT in this key area as 2021 unfolds.

We will update this page as 2021, and Solvency II’s future evolution, progresses.

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

Filter or search events

Start date
E.g., 26/01/2021
End date
E.g., 26/01/2021

Events calendar

  • Spaces available

    Drawing from his most recent book “The New Long Life” and his longevity research Andrew J Scott will outline how longer lives and new technologies will fundamentally reshape how we structure our lives and transform the economy. As well as looking at the agenda this will set governments and corporates he will focus on the implications for you and how you prepare your future career.

  • India Town Hall

    Webinar
    28 January 2021

    Spaces available

    IFoA Immediate Past President John Taylor would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual India Town Hall 2021, hosted by John Taylor with IFoA Council Member Mahidhara Davangere and IFoA Chief Executive, Stephen Mann. 

  • Spaces available

    What are the options for the world economy looking ahead?

    In this Thought Leadership Lecture, Economist, Vicky Pryce, will be discussing world economic trends, including the differences in geographical performance and how output is recovering and where.

  • Spaces available

    Trust and Leadership for Actuaries

    Led by Dr. Jim Baxter, University of Leeds, this webinar introduces some key ideas in the ethics of trust, with a particular focus on those in, or on the path to, leadership roles. Dr Baxter is joined by a panel of experienced leaders who will give their personal perspectives on how they understand the value of trust and how they seek to promote and inspire trust, drawing on their experiences of leadership. The panel includes:

  • Health and Care Hot Topics webinar

    Online webinar
    10 February 2021

    Spaces available

    In this webinar, we have two presentations showing the latest research on the implications for life and health insurers of two key issues: genomics and pandemic risk.

    Dr Peter Joshi and Paul Timmers will share their research on how well-established underwriting processes can allow for genomics in predicting expected mortality and morbidity. They will then discuss the potential for stratified screening and personalised medicine to improve health and reduce claim costs.

  • Spaces available

    As the world’s attention begins to turn to COP26 later this year in Glasgow, Sarah Gordon (Chief Executive, Impact Investing Institute) will share her vision for how the financial services industry can deliver for people and the planet, as well as how to encourage more investment with the intention to generate positive, measurable social and environmental impact alongside a financial return.

  • Sub-Saharan Africa Town Hall

    26 February 2021

    Spaces available

    IFoA Immediate Past President John Taylor would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual SSA Town Hall 2021, hosted by John Taylor with IFoA Council Members Mukami Njeru, Prosper Matiashe and IFoA Chief Executive, Stephen Mann.

  • MENAP Town Hall

    2 March 2021

    Spaces available

    IFoA Immediate Past President John Taylor would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual MENAP Town Hall 2021, hosted by John Taylor and IFoA Chief Executive, Stephen Mann.