The Great Fire of London was finally extinguished 350 years ago today. New insurance structures emerged in the aftermath of the Great Fire – which bear striking resemblance to some of ...05 September 2016
UK: New PRA Fundamental Rules
The final FRs differ from the draft set consulted on in CP2/14 (see post on March 13th, 2014) and take into account points raised during the consultation.
The FRs will form the foundation of the PRA's Rulebook. The FRs are as follows:
- FR1 – A firm must conduct its business with integrity.
- FR2 – A firm must conduct its business with due skill, care and diligence.
- FR3 – A firm must act in a prudent manner.
- FR4 – A firm must at all times maintain adequate financial resources.
- FR5 – A firm must have effective risk strategies and risk management systems.
- FR6 – A firm must organise and control its affairs responsibly and effectively.
- FR7 – A firm must deal with the PRA in an open and co-operative way and must disclose to the PRA appropriately anything relating to the firm of which the PRA would reasonably expect notice.
- FR8 – A firm must prepare for resolution so, if the need arises, it can be resolved in an orderly manner with a minimum disruption of critical services.
FR8 – Resolution
FR8 has particular significance for insurers as it introduces a requirement for resolution planning. Currently, the PRA has made no detailed rules concerning the provision of resolution information for insurers – unlike the rules for banks and investment firms. The PRA expects insurers to be responsive to discussions concerning the PRA's resolution plans, but appreciates that compliance with FR8 will need to be judged in the context of an insurer's own perception of its resolvability, absent any more detailed rules.
The Insurance Act 2015 (the "Act") comes into force tomorrow. It represents a fundamental departure from existing insurance law. The changes impact on a number of key areas which are...11 August 2016
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