The PRA has published a consultation paper (CP8/17), which includes proposed amendments and optimisations to the Senior Insurance Managers Regime (SIMR). It also includes a proposal to strengthen governance through requiring insurers to take steps to encourage board diversity. This CP is relevant to all Solvency II insurance firms (i.e. UK Solvency II firms, the Society of Lloyd’s and Lloyd’s managing agents, and third country (re)insurance branches), and to large non-Directive firms (large NDFs).
The PRA proposes the following amendments and optimisations to the SIMR:
- creating a new PRA Senior Insurance Management Function (SIMF) – the Chief Operations function (SIMF24);
- creating a new PRA Prescribed Responsibility (PR) for the firm’s performance of its obligations in respect of outsourced operational functions and activities;
- creating a new PRA SIMF, the Head of Key Business Area function (SIMF6), for individuals who are responsible for large business areas or divisions within a firm;
- requiring that the Chairman function (SIMF9) (Chair) and Chief Executive Officer function (SIMF1) (CEO) roles may not be held by a single individual at ‘large firms’ (as defined in the proposed definition in the Rulebook Glossary – see paragraph 2.19); and
- requiring that a Non-Executive Director (NED) oversight SIMF role at a ‘large firm’ that is part of a group may not be performed by a group executive (i.e. an individual performing some executive function within that same group).
The PRA also proposes to require Solvency II insurers and large NDFs to have a policy to consider a broad set of qualities and competences when recruiting board members and to have a policy to promote diversity among board members.
Comments should be submitted by 22 September 2017. The PRA intends to publish the final rules in Q4 2017.