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SDA appointed to the Skilled Persons Panel

30 June 2022
Alison Carr

SDA has recently been awarded a place on the Skilled Person Panel for Lot G “Prudential – Insurance”.  We have been appointed for a period until at least March 2026.  We have demonstrated to the regulators that we have the skills, experience and expertise to conduct reviews into whether firms have effective prudential arrangements and how these support safety and soundness, operational resilience or policyholder protection.

In order to get on the Skilled Person Panel, a firm needs to go through a rigorous assessment process covering our operations, financial standing, technical and professional skills and experience. Our success was based on our knowledge of relevant regulatory requirements, standards, guidelines and industry best practice and experience and expertise in many areas, including:

  • assessing risks arising from life and non-life insurance business,
  • business, capital and liquidity planning,
  • reserving and technical provisions,
  • underwriting, claims handling and pricing,
  • capital modelling,
  • reinsurance modelling and exposure management,
  • actuarial and asset-liability modelling
  • insurance Special Purpose Vehicles, insurance-linked securities and asset valuation
  • merger and acquisition due diligence
  • reviewing the preparation and reporting of regulatory returns
  • recovery and resolution planning, implementation, and reporting.

Our regular audit work has given us plenty of experience of reviewing actuarial work for a range of insurers and we have also carried out work as Independent Expert or equivalent for a number of insurance business transfers.  If you are considering an internal review or needing to appoint a Skilled Person, we are happy to talk through how you might meet your objectives in the best way. Please speak to your usual SDA contact or contact us on customersupport@sda-llp.co.uk  if you would like to discuss how we can support you.

S166 Reports

Under sections 166 and 166a of the Financial Services and Markets Act 2000, the FCA and PRA have wide powers to require an insurer to commission Skilled Person reports into any aspect of the firm’s business.  Such reports (commonly known as“S166 reports”) are usually requested if the regulator has a concern or has requested information or analysis from the insurer which has not been provided within a reasonable timeframe.  Examples include requiring that a Skilled Person reviews procedures or governance, provides assurance that work has been carried out in line with regulatory requirements or reperforms key calculations.  The Skilled Person must be independent of the insurer.

Usually, the insurer contracts with a Skilled Person firm chosen by them and approved by the regulator, although the regulator can impose a Skilled Person.  Either way, the costs are paid by the insurer and are usually significant.  Insurers can appoint from outside the Panel but using a firm on the Panel would generally reduce the likelihood of the regulator rejecting the insurer’s choice of firm.

The regulators publish information on the number of reviews and the broad subject areas.  These show that in seven years from April 2015 to March 2022, there were 464 reviews commissioned (on banks, building societies or insurers), of which 38 related to the “Prudential-Insurance” lot.

Whilst the regulators’ actions always consider the magnitude of any risks, therefore making S166 reviews more likely to be required for larger insurers, no insurer is immune to the possibility of a review.