Insurance firms have until the 27 May to respond with the Bank of England recommending that UK firms participate

The Bank of England (BoE) has launched its Solvency Report Cost Survey (19 April 2022) to further understand how insurance firms report and disclose cost.

As part of the next phase in the Solvency II process, the BoE survey will collect historical evidence of operational cost from insurance firms and their compliance with the existing framework to inform future reporting and disclosure policy proposals.

Firms have until the 27 May 2022 to respond, although participation is voluntary.

However, the BoE said that it highly recommends “UK insurance firms from all sectors to participate, given the importance of Solvency II reform”.

Initially introduced on 1 January 2016, Solvency II is a European Union (EU) legislative programme that sets out regulatory requirements for insurance firms on financial resources, governance and accountability and risk assessment.

Solvency II primarily deals with the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.

Statutory duty

The BoE added: “Under FSMA section 138J, we have a statutory duty to publish a cost benefit analysis to accompany the draft policy proposals, unless we consider that the costs or benefits cannot be reasonably estimated or practicable to produce.”

The survey follows MP John Glen announcing plans in February 2022 to overhaul the insurance sector’s regulation through reforming Solvency II – this aims to unlock billions of pounds to facilitate investment in the UK’s infrastructure and better enable growth.

Meanwhile, in January 2022, prime minister Boris Johnson announced that he would be bringing forward a new Brexit Freedoms Bill, which aims to end the special status of EU law in the UK’s legal framework, to ensure that it can be more easily amended or removed.