PRA sets out timeline for 2022 insurance stress test

Written by Adam Cadle

04/08/2021

The PRA has today written to the largest PRA-regulated life and general insurers setting out the timelines and high-level scope for the Insurance Stress Test 2022 exercise.

For life insurers, the stress testing exercise will primarily focus on economic stresses. “In recognition of the difficulty in achieving consistency across life firms in 2019, we intend to share the scenario design without calibration in September 2021 for early industry comment and feedback,” the regulator stated. “This will also provide a basis for engagement between us and individual firms to support firms’ delivery planning of IST 2022, including reporting.”

For general insurers the stress testing exercise will focus on natural catastrophe perils and cyber underwriting risk (including standalone or part of a broader package, as well as non-affirmative covers where relevant). In recognition of the complexity in designing a cyber underwriting scenario, the PRA will share the design of the cyber scenarios in September 2021 for early industry comment and feedback.

“The IST 2022 exercise will help inform our longer-term approach to insurance stress testing – with any identified changes to be included in our work following the review of Solvency II led by HM Treasury,” it concluded.

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