The Prudential Regulation Authority (PRA) has released its finalised policy on solvent exit planning for insurers, designed to ensure orderly market exits with minimal disruption. Published on Wednesday, the policy establishes mandatory preparation for solvent exits as part of insurers’ routine operations, including a Solvent Exit Analysis (SEA) and, where necessary, a Solvent Exit Execution Plan (SEEP).
PRA noted in a statement that the policy applies to UK Solvency II firms, non-directive firms, and the Society of Lloyd’s, but excludes Lloyd’s managing agents and UK branches of overseas insurers.
Following stakeholder feedback, the implementation date has been deferred to June 30, 2026.
The PRA anticipates that earlier identification of potential barriers, clear governance structures, and pre-emptive planning will enhance insurers’ ability to execute solvent exits without resorting to insolvency or disruptive outcomes. Key updates clarify alignment with existing frameworks such as Own Risk and Solvency Assessments (ORSA).
In response to the announcement, Ewen Tweedie, actuarial director at Broadstone, remarked:
“The PRA’s publication of its solvent exit planning policy aims to increase the likelihood of insurers being able to successfully execute a solvent exit by identifying earlier when an exit may be required, pre-emptively identifying potential barriers to exit and ensuring clearer governance, monitoring and communication during a solvent exit.
“We welcome the slight deferral of implementation until June 2026 – the extra time will give insurers space to ensure their SEA fully meet the requirements of the regulation, and more importantly increase policyholder confidence that an orderly solvent exit would be achievable if required. Now that insurers have clarity, they should get on with reviewing existing risk frameworks, engaging stakeholders, considering the resources required to execute a solvent exit and undertaking adequate assurance over a solvent exit analysis – either by internal audit or through seeking external assurance.”
As part of the rollout, the PRA plans ongoing engagement with industry bodies to support compliance.
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