UK Chancellor plans to bring forward SII review

Written by Adam Cadle

24/06/2020

The UK government is planning to bring forward a review of certain features of Solvency II (SII) to ensure that it is “properly tailored to take account of the structural features of the UK insurance sector” and expects to publish a call for evidence in Autumn 2020.

In a written ministerial statement, Chancellor Rishi Sunak said the “review will consider areas that have been the subject of long-standing discussion while the UK was a member state, some of which may also from part of the EU’s intended review".

“These will include, but are not limited to, the risk margin, the matching adjustment, the operation of internal models and reporting requirements for insurers,” Sunak added.

Commenting on the planned review of the Solvency II regime, ABI director of regulation Hugh Savill said: “We welcome a revision of Solvency II that will be suited to the British market, Improvements to the risk margin are long overdue and the matching adjustment needs to encourage munch-needed investment in the British economy in the wake of COVID-19.”

HM Treasury has also published a written ministerial statement relating to LIBOR transition. The statement sets out detail on the government’s approach to legislative steps that could help deal with ‘tough legacy’ contracts that cannot transition from LIBOR before end-2021.

In particular the government will use the Financial Services Bill to introduce amendments to the Benchmarks Regulation 2016/1011 as amended by the Benchmarks (Amendment) (EU Exit) Regulations 2018 (the ‘UK BMR’), to ensure that FCA powers are sufficient to manage an orderly transition from LIBOR.

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