Reinsurance risk part of UK’s PRA 2023 priorities

Reinsurance risk is one of the Prudential Regulation Authority’s (PRA) priorities for the supervision of life and general insurers in 2023, the Bank of England revealed.

Part of the UK’s central bank, the PRA is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. It also sets standards and supervises financial institutions at the level of the individual firm.

In a recent letter sent to all insurers, including third-country branches, supervised by the PRA, the Bank of England provided details for its 2023 priorities, which will form part of its ongoing assurance work.

These include financial resilience; risk management; implementing financial reforms; operational resilience; ease of exit for insurers; and reinsurance risk.

The letter said: “We are paying close attention to whether the continued high level of longevity reinsurance and the emergence of the more complex ‘funded reinsurance’ in the UK life market reduce the protection UK policyholders should have, beyond the risk tolerance.

“In particular, we see the potential for offshored counterparty concentration risk to arise from…