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Brexit and Solvency II: The Story So Far

In the light of the June 2016 Brexit vote, the UK Treasury Select Committee (TSC) opened an inquiry into the operation of Solvency II (SII) in the UK. The inquiry wanted to understand the strengths and weaknesses of SII in its existing form, together with exploring the options open to the UK insurance industry following the Brexit vote. 

The inquiry was – and remains - a real opportunity for the IFoA to influence this debate. The IFoA submitted a comprehensive written response on 11 November; a copy of it can be found here: IFoA response. A number of Practice Boards were heavily involved in putting it together, including the Life and General Insurance Boards, as well as the Retrospective on Solvency II Working Party, amongst others. Our thanks go to all the Boards, Committees, Working Parties and individual members who contributed to this important debate. 

The TSC published a number of the written responses they received, and we have produced a summary of a selection of these responses. Note that the summary is based on our own interpretation of these written submissions: IFoA Summary

IFoA Oral Evidence

Following our written evidence, the TSC invited the IFoA to provide supplementary oral evidence. Andrew Chamberlain, Chair of the Life Board, gave evidence on behalf of the IFoA on 17 January 2017, together with representatives from PWC and KPMG. 

Themes explored by the TSC at this meeting included the suitability of SII for the UK market, whether the PRA should have competition as a primary objective, and the wider impact of measures such as the Matching and Volatility Adjustments and the Risk Margin.  Our evidence focussed on the impact of SII from a public interest perspective, including the balance between policyholder security and policyholder value for money. The meeting went well and the TSC were left with a clear idea of some of the impacts of SII and potential solutions to address them. A video of this session can be found here – IFoA/TSC video - and the corresponding IFoA/ TSC transcript. 

We followed-up on our appearance with a brief letter summarising some of the issues/ potential changes which could be made to SII in the UK: Summary of SII Changes.  

The TSC had a subsequent session with further respondents on 25 January 2017, and the corresponding video / transcript can be found here: 25 Jan video25 Jan transcript.

TSC Sessional Event

The week after our attendance at the TSC, we held the first ever dual-site live sessional event in the IFoA’s history. The event drew together IFoA working parties at Staple Inn and Edinburgh on 23 January, and featured a live video feed between both sites and on-site presentation and discussion. 

The sessional meeting started with a debrief from Andrew Chamberlain on our evidence to the TSC, including the wider context to the Committee.  There then followed updates from two Working Parties relevant to the themes of the TSC inquiry (Retrospective on Solvency II and Transitional Measure on Technical Provisions). The event closed with a Q&A session live from both sites.

The meeting was a success, and the IFoA hopes to replicate this dual-site model in the future. Our thanks go to Andrew Chamberlain, the two sessional Chairs and both Working Parties for presenting on the night. A video of the sessional meeting will be added to this site when available. 

Next Steps

The TSC is a particularly influential committee, and Government departments, notably HM Treasury, are likely to consider carefully what the TSC have to say. We will be monitoring developments with the TSC carefully, and hope to have further IFoA input on the ongoing evolution of insurance regulation in the UK.

We will update this page as the debate progress. 

Resources
Title Date
IFoA summary and analysis - TSC Solvency II Inquiry 31 January 2017
Insurance industry evidence to the Treasury Select Committee Solvency II Inquiry: 25 January 2017
Summary of Solvency II changes 17 January 2017
IFoA evidence to the Treasury Select Committee Solvency II Inquiry: 17 January 2017
IFoA response to TSC Solvency II Inquiry 11 November 2016

Contact Details

Policy Team

policy@actuaries.org.uk

IFoA, 7th Floor, Holborn Gate, 326 – 330 High Holborn, WC1V 7PP

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Events calendar

  • Webinar Series: Risk and Investment Conference 2019, 17 June

    These are online webinar events
    17 June 2019

    Spaces available

    The IFoA’s Risk Management and Finance and Investment Boards are delighted to host a series of webinars covering a range of topical and trending topics ranging from climate related risks to Brexit.

  • Spaces available

    Increasing global concern over the impact of climate change has recently led to public scrutiny over the adequacy of existing risk management practices by insurance firms and pension schemes in dealing with these challenges, that potentially impact both individual actuaries and the IFOA generally.

     

  • Pensions Conference 2019

    Bristol Marriott Hotel City Centre, 2 Lower Castle Street, Old Market, Bristol, BS1 3AD
    18-19 June 2019
    Spaces available

    Five plenaries and 13 workshops cover current topics and industry trends in the Pension sector with the opportunity to develop your network at the pre-conference evening dinner (18 June).  There is also a day ticket option available for the 19 June. 

  • KSS event – FinTech and The Actuarial Profession

    EY, Atria One, 144 Morrison Street, Edinburgh
    19 June 2019

    Spaces available

    This KSS talk from FinTech Scotland's CEO will explore the mission to create an integrated Fintech ecosystem through provision of funding, support, infrastructure and talent that recognises and responds to the needs of all stakeholders - and the overarching aim for Scotland to be one of the top 5 Fintech global leaders by 2020.

    To book your place, please email Barry_Shannon@standardlife.com 

  • Current Issues in General Insurance (CIGI) 2019

    Inmarsat, 99 City Road, London, EC1Y 1BJ
    19 June 2019

    Spaces available

    CIGI is a well-established one-day seminar designed to increase awareness and encourage discussion on a variety of topical issues across the general insurance industry. 

    There will be an excellent and diverse line-up of speakers to provide a variety of perspectives and challenge covering technical and professional areas. 

  • Cass Event – New Thinking about Deferred Annuities

    Cass Business School, Executive Education Facilities 200 Aldersgate St, London EC1A 4HD
    21 June 2019

    Spaces available

    Our motivation for discussing this important subject comes from some exciting recent research which has analysed the impact of behavioural factors on the decision to purchase an annuity. This work has shown that behavioural factors can explain the well-known low demand for immediate annuities but this research also identifies an important opportunity in relation to deferred annuities (DA). The research suggests that these factors lead to positive incentives to purchase a DA and that, for longer deferred periods, a DA could be an attractive product for both consumers and insurers.

  • IFoA/SAS Joint Professional Skills Training – Singapore

    Room 903, NTUC Centre, Level 9, One Marina Boulevard, Singapore 018989
    25 June 2019

    Spaces available

    The Institute and Faculty of Actuaries (IFoA) and Singapore Actuarial Society (SAS) are organising a joint Professional Skills Training (PST) in Singapore. This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Life, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • Webinar Series: Risk and Investment Conference 2019, 26 June

    These are online webinar events.
    26 June 2019

    Spaces available

    The IFoA’s Risk Management and Finance and Investment Boards are delighted to host a series of webinars covering a range of topical and trending topics ranging from climate related risks to Brexit.

  • AGM and Presidential Address 2019 + Volunteer and Member Drinks Reception

    The Hub  Castlehill Edinburgh EH1 2NE
    26 June 2019

    Spaces available

    Notice is hereby given that the ANNUAL GENERAL MEETING of the INSTITUTE AND FACULTY OF ACTUARIES will be held at The Hub, Edinburgh on Wednesday 26 June 2019 at 16.30 (Preceded by tea from 16.00) and followed by a PRESIDENTIAL ADDRESS given by John Taylor.

  • IFAM event - Actuarial Teachers’ & Researchers’ Conference 2019

    Institute for Financial and Actuarial Mathematics Department of Mathematical  Sciences The University of Liverpool Mathematical Sciences Building Peach Street Liverpool, L69 7ZL
    27 June 2019 - 29 June 2019

    Spaces available

    The Institute for Financial and Actuarial Mathematics (IFAM) at the University of Liverpool is pleased to host the 2019 Actuarial Teachers’ and Researchers’ Conference from 27-28 June 2019. This annual two-day event has been running annually now for many years, each time hosted by a different university, and provides all those interested in actuarial research and education a great opportunity to share their ideas and catch up on the latest developments.

  • IFoA/ASM Joint Professional Skills Training – Kuala Lumpur

    Menara AIA, Auditorium, 99 Jalan Ampang, 50450, Kuala Lumpur
    28 June 2019

    Spaces available

    The Institute and Faculty of Actuaries (IFoA) and Actuarial Society of Malaysia (ASM) are organising a joint Professional Skills Training (PST) in Kuala Lumpur. This session is suitable for actuaries working in any area (i.e. it is not specifically aimed at Life, GI or any other technical discipline) and is interactive, so you should come along prepared to take part in the discussions.

  • SIAS: The Impact of Air Pollution on Health and Life Expectancy

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    2 July 2019

    Spaces available

    Air pollution has gained increasing attention lately. Nicola Oliver, head of longevity and mortality research for Medical Intelligence, will discuss not only the impacts of air pollution on health and life expectancy but also how as an industry we should be addressing it.

  • Spaces available

    The actuarial profession has much to offer the world of banking. In this webinar actuaries with experience in various fields of banking will talk about the opportunities there are in banking; describing the actuarial aspects of the work they do as well as other roles within their area of banking.

  • Implications of 2019 IFRS 17 Exposure Draft

    Staple Inn Hall, High Holborn, London, WC1V 7QJ
    24 July 2019

    Spaces available

    Towards the end of June, the International Accounting Standards Board (IASB) is expected to publish an Exposure Draft (ED) of limited changes to its insurance contracts standard IFRS 17, effective date 2022. To help IFoA members, the IFoA’s cross-practice Financial Reporting Group (FRG) is hosting an event at Staple Inn covering these developments. 

    For more information on the FRG please visit this webpage

  • KSS event – The Regulatory Perspective

    Deloitte Saltire Court 20 Castle Terrace Edinburgh EH1 2EG
    5 September 2019

    Spaces available

    This KSS talk, presented by the FCA Head of Department in Scotland, will focus on the following 3 main areas:

    • FCA business plan priorities
    • The future of regulation
    • FCA Engagement in Scotland
  • Sessional Research Event - Risk Margin Working Party

    Staple Inn Hall, High Holborn London, WC1V 7QJ
    9 September 2019

    Spaces available

    For life insurers in the UK, the risk margin is one of the most controversial aspects of the Solvency II regime. Following its implementation, the risk margin came under considerable criticism for being too large and too sensitive to interest rate movements. These criticisms are particularly valid for annuity business – such business is of great significance to the national system for retirement provision. This criticism has led to political interest, and the risk margin was a major element of the Treasury Committee inquiry into Solvency II.

  • GIRO Conference 2019

    EICC, The Exchange, 150 Morrison St, Edinburgh EH3 8EE
    24-26 September 2019
    Spaces available

    GIRO is attended annually by over 800 delegates and speakers who are keen to discuss key topics such as Pricing, Reserving, Modelling and the future of the insurance industry. GIRO 2018 was a huge success and we have opened bookings early for what we hope will be another brilliant conference at the EICC in Edinburgh this year. 

     

  • Autumn Lecture 2019, London - Rt Hon Nicky Morgan MP

    Lincoln's Inn The Treasury Office, London WC2A 3TL
    2 December 2019

    Spaces available

    The IFoA is pleased to announce that this year’s Autumn Lecture will feature the Rt Hon Nicky Morgan MP as its guest speaker.  Nicky has previously served as Financial Secretary to the Treasury and Minister for Women. She now chairs the Treasury Select Committee whose remit is to examine the expenditure, administration and policy of HM Treasury, along with all of its agencies and associated bodies.