The Prudential Regulation Authority (PRA) has published Policy Statement (PS) 9/25, setting out its final policy and feedback to CP15/24 on proposed reforms to the UK Insurance Special Purpose Vehicle (UK ISPV) regulatory framework, marking a key step in its ongoing reform efforts.
According to the PRA, the PS intends to enhance the safety and soundness of the insurance sector by making more diversified reinsurance capital available to cedants, whilst enabling the UK to play a bigger role in the global Insurance Linked Security (ILS) market, by making it simpler and more attractive to establish UK ISPVs.
The reforms reportedly introduce a new accelerated pathway for certain UK ISPV applications which meet the criteria set out in the PRA’s new statement of policy.
“Under the accelerated pathway, in collaboration with the Financial Conduct Authority (FCA), the PRA will consider applications and, where satisfied, issue approvals within 10 working days (rather than the current 4–6-week process) of an application being submitted to the PRA and deemed complete,” the PRA explained.
The Authority noted that the reforms will make it easier to carry out a broader range of market practices in the UK, while also speeding up and simplifying the application and approval process. The PRA and FCA have also streamlined Senior Management requirements for UK ISPVs.
The reforms also clarify the PRA’s expectations for UK insurers transferring risk to Special Purpose Vehicles, regardless of location, supporting its goals of financial stability and policyholder protection by improving access to diversified reinsurance capital.
Vicky White, the Director for Prudential Policy, commented, “These reforms will deliver a much faster turn-around time for approval of new Insurance Special Purpose Vehicles in the UK, supporting growth and competitiveness while maintaining safety and soundness.”
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