PRA emphasises rules on board diversity among SII insurers

Written by Adam Cadle

04/03/2020

The PRA is re-emphasising the need for Solvency II firms to engage a “broad set of qualities and competencies when recruiting to the management/governing body” and for this purpose to “put in place a policy to promote diversity of the management body”.

In letter addressed to Solvency II firms, large non-directive firms and CRR firms, the PRA said: “Diverse boards, made up of members with different skills, knowledge, experience and values will support different perspectives being brought to discussion on business operations and risk strategy.

“PRA diversity requirements aim to reduce the risk of groupthink, which can adversely affect the safety and soundness of PRA-regulated firms.”

The publication of the European Banking Authority’s (EBA) report on the benchmarking of diversity practices in February 2020 showed that 70% of the sampled UK credit institutions and investment firms have a policy in place for promoting diversity on the management body.

“While there has been substantial progress since 2015 (when only 15% of the sampled UK credit institutions and investment firms reported to have a policy), compliance is still not universal,” the PRA stated.

Following the initial EBA benchmarking report, the PRA extended these requirements to insurers in April 2018.

Related Articles