Proposed changes to the Solvency II QRTs
This is a brief summary of Consultation Paper (CP) 11/21 covering Phase 1 of the proposed changes to the Solvency II reporting and disclosure requirements and therefore to the quantitative reporting templates (QRTs). The PRA published these proposals in line with HM Treasury’s review of Solvency II.
The emphasis of the suggestions is to decrease firms’ workloads and the financial information reported to the PRA. These changes can be rapidly applied with little operational cost and effect on firms.
The proposals in this CP would reduce reporting through removing some repetition and increasing proportionality thresholds. Moreover, the proposals may develop the market efficiency in the UK, especially for smaller firms, who will take advantage from the exclusion of quarter one and three QRTs.
Please see below a summary of the Phase 1 proposals:
- removal of specific reporting requirements of Solvency II QRTs:
- 06.01 summary of assets
- 15s guarantees of variables
- from S.29.01 to S.29.04 variation analysis
- decrease in the Minimum Capital Requirement (MCR) reporting frequency
- template S28s from quarterly to semi-annual
- increase in the reporting proportionality threshold for S.16.01
- giving exemption to reinsurance business for reporting specified non-life annuities
- extension to the quarterly reporting waivers
- expanding exemption to include Category 3 firms
- amendments to the relevant PRA supervisory statements
- reflect the above proposed changes;
- eliminate subdivisions that are no longer compulsory
- explain positions following Brexit
The PRA’s implementation date for the changes and proposals is on and after Thursday 31 March 2022 and feedback can be made on the plans until Friday 8 October 2021, when the consultation closes.
Phase 2 of the review will be a more thorough review of all the disclosure and reporting framework in conjunction with the PRA Solvency II review. There might be substantial updates regarding the Solvency II quantitative requirements calculations, in order to provide a complete framework that can be performed more successfully by the PRA, and more proficiently applied by firms. The Quantitative Impact Survey (QIS), just published by PRA, will be used to support the review phase 2. Additionally, the phase two will be finally consulted on during 2022 with additional proposals.
There is hope in the industry that this will also eventually lead to the removal of the requirements for quarter four QRTs, given the duplication with the year-end QRTs.