PRA Data collection exercises 2014

Published by Kim Durniat, Vivienne Maclure on

On 14 April 2014, the PRA published a summary of data collection exercises that will be requested during 2014.

The main focus is to support the transition to Solvency II and provide the PRA with useful information for ongoing supervisory review work.

We have summarised what the PRA is asking firms to do and when:

Exercise Applies to Further details Commencement
SCR comparison All firms

Aim is to understand the differences between:

  • the Individual Capital Assessment (ICA);
  • the standard formula SCR; and
  • the internal model SCR (if applicable).

Exercise based on EIOPA’s ‘Technical Specification for the Preparatory Phase’, released April 2014.

Template to be issued by PRA in early May for firms to complete.

Firms have 3 months to complete.

Early May 2014
Non-IMAP approvals survey All firms

Aim is to gather information on non-IMAP approvals.

The non-IMAP approvals process is still to be finalised.

This survey will provide information on:

  • Undertaking Specific Parameters;
  • Ancillary Own Funds;
  • The Matching Adjustment
Early May 2014
Standardised Risk Information IMAP and selected non-IMAP firms

Aim is to help the PRA understand the drivers for overall capital requirements.

Repeat of 2013 exercise.

Firms to provide information for key risk variables in a survey.

The scope has been increased for general insurance firms from previous exercises but is similar for life insurance firms.

Early May 2014
Early Warning Indicators All IMAP firms

Aim is to aid the PRA in its development of Early Warning Indicators.

The PRA will issue a data collection exercise in early September 2014 for response by October 2014.

Early Sept 2014
Stress Testing General Insurance firms

Aim is to allow supervisors to answer key risk questions whilst obtaining greater clarity in firms’ stress and scenario tests.

The design of the scenarios will be developed by the PRA during 2014.

EIOPA have launched a European wide stress test, which should provide useful information on stress testing.

End of Q4 2014
Technical Provisions General Insurance firms

Aim is to help the PRA’s understanding of the balance sheet.

The details for the request will not be issued until the end of 2014.

Further information has been published by the PRA outlining things to consider and current methods being used:

End of Q4 2014

One of the key differences to previous exercises is the increased involvement of all firms (not only IMAP firms).

Firms will need to calculate a full Solvency II balance sheet.  Together with other requirements based on the interim guidelines, this means that firms will have to be progressing with Pillars 1, 2 and 3.  For firms that have progressed well with their Solvency II projects this may not be too onerous.  However for those that have put their projects on hold, it’s time to dust off their models, get them running and check they are fit for purpose!  Firms should also be considering establishing efficient processes now that will enable them to meet the ongoing requirements.