This policy paper addresses reinsurance-specific concerns and evaluates the reinsurance marketplace in examining the relationship between reinsurance and financial stability and whether traditional reinsurance-related activities pose systemic risk. It addresses reinsurance-specific concerns relating to market concentration rates, risks arising from accumulations and high value risks, and issues associated with alternative risk transfer, which include activities such as the underwriting of CDS products. It concludes that traditional reinsurance is unlikely to cause, or amplify, systemic risk, but that the case may prove to be different for non-reinsurance activities. It also finds that while reinsurance establishes intra-sector connectivity, the mainly hierarchical structure of the (re)insurance market dampens any propagation of shock

HMT has published feedback on its consultation in December 2011 re the above, including its response on key issues and details of the legislative approach to be implemented. It is confirmed that it will repeal paragraph 22 of schedule 3 with effect from 21 December 2012 (see draft regulations at Annex A of this document). It invites further feedback from stakeholders after 21 December 2012 and notes that the Government will continue to engage with the EC to discuss whether and how further clarity can be provided on the application of the Gender Directive. It is emphasised that insurers should seek their own legal advice when considering how to amend their practices to comply with the Test Achats case and the Gender Directive.

ABI has appointed Robert Hingley, a Lazard & Co adviser and former Takeover Panel DG, as its new head of investment affairs. He is expected to take up the role on 3 September 2012.

Text of the above, given at the Industry Summit on Consumer Insurance Law and Regulation in London, follows. Topics include: Consumer Insurance (Disclosure and Representations) Act 2012; insurance complaints; price comparison websites and IMD.

ABI has published a good practice guide for insurers.

EIOPA has published a press release noting that it hosted a steering committee meeting on 11 July 2012 on the above in Frankfurt. The meeting focused on the progress in the analysis of the EU and US regulatory and supervisory systems. This analysis is related to seven key areas: professional secrecy; group supervision; solvency & capital requirements; reinsurance and collateral requirements; supervisory reporting, data collection & analysis and transparency to the market; supervisory peer reviews; independent third party review and supervisory on/site exams/inspections. The next Steering Committee meeting is scheduled for October 2012 and will take place in Washington.

FSA has published its finalised guidance in respect of the above. It sets out FSA’s view of what a PPI CCL should contain, and how it should be presented so that it is clear, fair and not misleading and also sets out FSA’s views of how complaint handling rules and the time limits on a consumer making a complaint are relevant to PPI CCLs. It also covers some other relevant obligations such as record keeping. In addition, FSA has published a summary of feedback on the guidance consultation.

The report underlines the purposes of the ORSA and provides additional details on how the ORSA is to be interpreted. Undertakings are expected to have the necessary competence and expertise to find fit-for-purpose solutions for the practical implementation of the ORSA.

The report states the level of granularity of the information that supervisory authorities will need to receive. EIOPA notes that the ongoing discussions related to the Omnibus II Directive and the future implementing measures are expected to lead to changes in the reporting requirements. The design or structure of the templates may also be affected by the development of the respective IT reporting standards, but EIOPA argues that the industry should use this package already now in order to start the implementation phase. EIOPA expects that the full package on reporting and disclosure with all the changes incorporated will be available later in 2012.

This CP follows CP11/22, which focused on Level 1 requirements set out in Solvency II and picks up some of the topics held over from that, including areas where FSA has national discretion and rules specific to the UK insurance sector – in particular, Lloyd’s market and with-profits business. Section I of CP12/13 sets out how Solvency II aligns with the on-going European legislative process and the programme of regulatory reform in the UK. Section II contains feedback on CP11/22, in response to specific questions on transposing the prudential aspects of Solvency II. FSA has reconsidered its approach in certain policy areas. Section III sets out some new rules and guidance to form part of SOLPRU – the new prudential sourcebook for Solvency II insurers. The proposed rules and guidance address areas that were not covered, or were only partially covered, in CP11/22. On the Lloyd’s market, FSA intends the rules to be woven into each chapter of SOLPRU, with the addition of a new application chapter at the end of SOLPRU. Section IV proposes amendments to rules and guidance relating to other sourcebooks. The first two chapters relate to with-profits and unit-linked products where FSA intends to make respective changes to other sourcebook requirements, primarily COBS, in light of Solvency II. These changes will take effect at the same time as Solvency II is implemented, unless otherwise indicated. On with-profits, the rule changes aim to distinguish between Solvency II firms and out of scope Solvency II firms. FSA emphasizes that none of the proposed changes impact on out of scope or otherwise non-directive firms, which will be subject to existing Handbook provisions. The third chapter in this section deals with application rules (originally earmarked in CP11/22) and further consequential amendments to the sourcebooks. The draft rules and changes to the Handbook (including SOLPRU) as a result of the proposals are set out in the Appendices. Issues not covered in this CP: (1) National Specific Reporting Templates – work on which has been integrated within an overall review of reporting and notification requirements under the jurisdiction of PRA and FCA. (2) External audit – on which discussions are still ongoing within EIOPA and on which level 3 guidance is still being developed. (3) Further amendments to FIT and SUP to reflect changes in controlled functions (EIOPA guidance on the fit and proper assessment has yet to be finalised) and the need to understand the changes required to pide the approved persons regime between PRA and FCA before FSA can confirm the final detail of any changes arising from Solvency II. FSA has now decided not to implement separate CF14 (risk function) and CF15 (internal audit) for Solvency II firms, as indicated in CP11/22, but to continue to regulate these functions under the existing CF28 function for the time being. (4) Grandfathering existing Insurance Special Purpose Vehicles. (5) Cost comparisons of using internal models v Standard Formula for calculating firms’ (6) FSA intends to communicate further on these issues as and when appropriate. FSA adds that it is in the process of are communicating with insurance firms about the review and ongoing monitoring of internal models. Responses to the CP must be received by 11 October 2012 and FSA will publish feedback together with final rules relating to both this CP and CP11/22.