Overall effect of UK solvency reforms will benefit UK insurers, AM Best says

Written by Adam Cadle

05/11/2024

The overall effect of UK solvency reforms due to be set out in November will be beneficial to UK insurers, according to a new report from AM Best.

AM Best noted that in the longer term, product innovation might be enhanced by the new treatment of certain assets and liabilities that would not previously have qualified for the matching adjustment.

In September 2024, the United Kingdom’s insurance market financial regulator, the Prudential Regulation Authority (PRA), released a statement setting out its intention to publish a final package of rules following a review of Solvency II. Scheduled for publication in November 2024, the impact of these reforms will fall primarily on the UK’s life insurance segment.

AM Best stated: “While the reforms mark the beginnings of a divergence between the UK and the EU solvency regimes following the UK’s exit from the EU, nevertheless, the two regimes remain very close.”

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