Consultation outcome

Solvency II Review: Consultation

• From: HM Treasury
• Published: 28 April 2022
• Last updated: 17 November 2022 — See all updates

This was published under the 2019 to 2022 Johnson Conservative government

This consultation has concluded

Read the full outcome

Review of Solvency II: Consultation Response

PDF, 250 KB, 25 pages

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Detail of outcome

This consultation response sets out the government’s final reform package, introducing a simpler, clearer, and much more tailored regime:

• cutting the risk margin significantly, with a 65% cut for long-term life insurance business;
• maintain the existing methodology and calibration of the fundamental spread, while allowing for the use of notched ratings; and
• increasing investment flexibility by overhauling eligibility rules for the matching adjustments; and
• slashing red tape lingering from the EU, which imposes unnecessary burdens on firms, restricting innovation in our vibrant market.

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Original consultation

Summary

The government seeks views on reforming the prudential regulation of the UK insurance sector.

This consultation ran from
7am on 28 April 2022 to 11:59pm on 21 July 2022

Consultation description

Solvency II is the regime that governs the prudential regulation of insurance firms in the UK. This consultation is an important stage of the Review of Solvency II. The review is underpinned by three objectives:

• to spur a vibrant, innovative, and internationally competitive insurance sector
• to protect policyholders and ensure the safety and soundness of firms
• to support insurance firms to provide long-term capital to support growth, including investment in infrastructure, venture capital and growth equity, and other long-term productive assets, as well as investment consistent with the government’s climate change objectives.

This consultation provides more detail on the reforms announced by the Economic Secretary to the Treasury on 21 February. It seeks views on the outcomes of the reforms. The evidence provided will inform the design of the final reform package.

Documents

Review of Solvency II: Consultation

Ref: ISBN 978-1-911686-89-7 , PU3213

PDF, 243 KB, 32 pages

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Published 28 April 2022
Last updated 17 November 2022 + show all updates

1. 17 November 2022

   Updated with Consultation Response.

2. 28 April 2022

   First published.