The Prudential Regulatory Authority (PRA) has set out draft proposals covering the use of internal and partial internal models to calculate solvency capital requirement (SCR).
The regulator has published a series of internal model codes, which correspond to different risk categories, and reporting templates in a consultation document.
The document contains a separate list of codes for life products, similar to the categories used by the Association of British Insurers, which are investment and savings, individual pensions, corporate pensions, protection and annuities.
The PRA is seeking views on the proposals and comments can be submitted to [email protected]. The consultation runs until 10 July. Meanwhile, it has published a supervisory paper, which sets out the regulator's expectations of firms applying for approval to use volatility adjustment (VA).
In the statement Solvency II: supervisory approval for the volatility adjustment, the PRA clarified what items should be included in the application to use the VA, how the PRA would use the content of application to assess whether statutory conditions for approval to use the VA are met, and how the approval process would work.
The PRA urged all firms to notify their usual supervisory contacts as early as possible if they intend to make an application. It will determine all applications within six months from the date a complete application is received, but for VA approval applications alone (those not dependent on other applications), the regulator said it would aim to make decisions within six weeks from receipt of the application.