Solvency II meaning

Purpose of this Checklist This checklist supports Solvency II UK firms in aligning governance, systems and controls with the expectations of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). It should be read alongside Practice Note: Governance, systems and controls requirements for insurers, which provides a more detailed overview of the relevant requirements. Governance and organisational structure Confirm the board holds ultimate accountability for compliance with PRA, FCA and applicable legislative obligations. Establish a robust system of governance, featuring a transparent organisational structure with clearly allocated and segregated responsibilities. Regularly review and update written policies covering risk management, internal control, internal audit and, where relevant, outsourcing. Maintain documented governing body approvals for significant decisions and policy changes. Risk management Implement and embed an effective risk‑management system within decision‑making, ensuring ongoing identification, measurement, monitoring, management and reporting of risks. Incorporate comprehensive strategies, stress testing, scenario analysis and development of the own risk and...

ARCHIVED : This Checklist has been archived and is not maintained . STOP PRESS: From 1 November 2024, the UK’s new securitisation framework took effect, annulling and supplanting the onshored EU legislative regime. Although the UK rules broadly preserve the substance of the prior onshored EU approach, they part company in several notable respects, including scope, risk retention, transparency, due diligence and STS designation. For a side-by-side of the STS criteria under both frameworks, see Practice Note: UK and EU securitisation regimes—comparison. On 17 June 2025, the European Commission issued its long-anticipated review of the EU Securitisation Framework, together with an extensive legislative package proposing amendments to the EU Securitisation Regulation (Regulation (EU) 2017/2402), the EU Capital Requirements Regulation (Regulation (EU) No 575/2013), the EU Solvency II Delegated Regulation (Commission Delegated Regulation (EU) 2015/35) and the EU Liquidity Coverage Requirement Delegated Regulation (Commission Delegated Regulation (EU) 2015/61). Proposed changes to the EU Securitisation Regulation cover, among other matters, risk retention, due diligence, transparency, STS on-balance sheet securitisations and...

ARCHIVED: This document is archived and is no longer being updated. Regulation (EU) 2017/2402 (the EU Securitisation Regulation) took effect on 18 January 2018 and has applied across the EU since 1 January 2019. From IP completion day (31 December 2021), Assimilated Regulation (EU) 2017/2402 (the UK Securitisation Regulation) has applied in the UK. This Checklist describes the due diligence, risk assessment and ongoing monitoring duties that apply to institutional investors in: the EU, under the EU Securitisation Regulation; and the UK, under the UK Securitisation Regulation. For general information on the EU and UK securitisation regimes, see Practice Notes: UK Securitisation Regulation—essentials [Archived], UK regulatory capital treatment of securitisations under CRR and Solvency II and Legislation guide for transactional lawyers—UK Securitisation Regulation [Archived], the STS securitisation criteria—checklist [Archived] and the EU and UK Securitisation Regulations—timeline [Archived]. Note that the UK government is undertaking reform of the UK securitisation regime that will lead to the repeal of the UK Securitisation Regulation....

ISPVs enable insurers to reduce their exposure to significant events, including natural catastrophes, by passing risk to private investors via catastrophe bonds, or 'cat bonds'. Shoib Khan, the central bank’s Prudential Regulation Authority (PRA) director for insurance supervision, said the PRA will outline later this year how it plans to shorten approval times for submitted cat bond applications to ten working days, down from the current four to six weeks. Speaking at the Bank of America Securities Annual Financials CEO Conference, Khan added that the PRA intends to consult later this year on creating a new, accelerated pathway for catastrophe bond applications...

In this issue: TPR publishes new general code of practice Investment Pension benefits Daily and weekly news alerts Dates for your diary Trackers TPR publishes new general code of practice The Pensions Regulator (TPR) has now issued the long-awaited general code of practice, bringing together and updating ten of its existing codes into a single code made up of 51 shorter, topic-based modules. TPR says this new layout will help governing bodies to locate its expectations quickly and to confirm whether they are being met. The ten codes included cover reporting breaches of the law, early leavers, late payment of contributions, trustee knowledge and understanding, MNTs/MNDs, internal controls, dispute resolution—reasonable periods, DC governance, and public sector governance. The general code was released alongside TPR’s final response to its 2021 consultation on the general code. Following comments made to the consultation, TPR has made numerous minor changes and, in some instances, remodelled or retired certain modules. For the most...

Insurance & Reinsurance weekly highlights—18 January 2024 In this issue: Ukraine conflict Coronavirus (COVID-19) Cases and decisions Types of insurance Market practice Regulation Solvency II New and updated content Case trackers Key dates Daily and weekly news alerts LexTalk®Insurance: a Lexis®Nexis community Ukraine conflict This week, Scottish practice Brodies LLP confirmed it had supported Ukraine’s Export Credit Agency on an innovative war risks insurance mechanism, extending protection to shipowners and charterers and enabling the nation to move cargo across the Black Sea amid ongoing hostilities with Russia. See News Analysis: Brodies steers war risk insurance for Ukrainian exports. The conflict in Ukraine has profoundly reshaped the aviation insurance sector. Claims on aviation policies have become a central battleground as lessors try to recoup losses for aircraft left in Russia (typically still held and operated by Russian carriers). Consequently, a wave of proceedings has been commenced before the English, US, and Irish...

This Practice Note examines the Bank of England (BoE) and the Prudential Regulation Authority (PRA)’s supervisory expectations for banks and insurers in managing climate‑related financial risks, as articulated in supervisory statement SS3/19 (updated November 2024), alongside the related policy statement PS11/19. Background and introduction On 15 April 2019, the PRA issued PS11/19: Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change, which summarised responses to consultation paper CP23/18 and included the final SS3/19 setting out the PRA’s expectations. The PRA observed that climate change, and society’s response to it, generate financial risks relevant to its objectives and, although such risks may fully emerge over longer horizons, they are already starting to be seen. SS3/19 set the expectation that firms take a strategic approach to climate‑related risk management, identifying present exposures and plausible future risks, and implementing suitable measures to mitigate them. A revised SS3/19, updated to reflect PS15/24—Review of Solvency II: Restatement of assimilated law, was published on 15 November 2024. The PRA’s...

This Practice Note outlines the passporting entitlements and associated notification obligations of insurance undertakings based in the EEA under Directive 2009/138/EC (the Solvency II Directive). The Treaty and Solvency II The Treaty on the Functioning of the European Union (TFEU) provides the overarching framework for freedom of establishment and the free movement of services within the EU. In the financial services sphere, including insurance, these freedoms are further detailed by the Single Market Directives. The regulatory regime for EEA life and non-life insurers and reinsurers—covering supervision, solvency, risk management, governance, reporting and passporting—is set out in the Solvency II Directive, supported by Commission Delegated Regulation (EU) 2015/35 (the Solvency II Delegated Regulation) together with applicable Implementing and Regulatory Technical Standards (RTS). Under Solvency II, an insurance undertaking that has secured authorisation from its home state regulator may exercise the right of establishment and/or provide cross-border services in other EEA Member States. The scope of passporting rights Passporting rights under Solvency II extend to those undertakings...

What is operational resilience? This Practice Note outlines the key operational resilience requirements that apply to UK financial services firms. Operational resilience is the capacity of firms, and the financial sector, to prevent, adapt, respond to, recover from, and learn from operational disruption. It goes further than business continuity and disaster recovery and is a strategic priority for regulators around the world. Operational resilience-in-scope firms The summary below sets out the categories of firms within scope of the UK operational resilience regime and the applicable rules and guidance from the PRA, FCA and Bank of England. Banks, building societies, and PRA-designated (ie systemically important) investment firms: PRA/FCA/BoE joint paper: Building operational resilience: Impact tolerances for important business services PRA Policy Statement PS6/21: Operational resilience: Impact tolerances for important business services The Operational Resilience Part of the PRA Rulebook (CRR firms) PRA Supervisory Statement SS1/21: Operational resilience: Impact tolerances for important business services PRA Statement...

BREXIT At 11pm (GMT) on 31 December 2020—known as ‘IP completion day’—the transition/implementation period entered into following the UK’s withdrawal from the EU came to a close. From that point onwards, key transitional arrangements came to an end and wide‑ranging changes started to take effect across the UK’s legal regime. This document provides guidance on subjects affected by these changes. Before continuing your research, see: Brexit and financial services: materials on the post‑Brexit UK/EU regulatory regime [Archived]. This Q&A assesses the impact of Brexit on passporting in the insurance sector, outlines the options available to insurers to continue to access the European Economic Areas (EEA), and highlights the factors for insurers to take into account in their contingency planning. This Q&A is produced in partnership with Clare Swirski at Clifford Chance. What are the main aspects of passporting under Solvency II?...