David Rule: Changing risks and the search for yield on Solvency II capital

Speech by Mr David Rule, Executive Director of Insurance Supervision of the Bank of England, to the Association of British Insurers, London, 6 July 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Regulatory change has dominated our insurance supervision agenda for the past few years. Today I want to talk mainly about risks. Our supervisory work is similarly shifting gear. As Solvency II becomes business as usual, we will spend more of our time understanding the risks that insurers are taking and, where necessary, responding to them.  

I do though want to make a couple of initial points about Solvency II.  First, we are making good progress, working with the ABI, in identifying improvements to our implementation of it. This follows up the commitment made by Sam Woods to the Treasury Select Committee in February. Amongst the areas we are working on are our processes around model changes and the matching adjustment; and regulatory reporting.We are working within the bounds of the EU legislation and I do not anticipate any headline-grabbing initiatives. But I am confident that we will identify a number of practical changes that will make a difference to insurers and supervisors on the ground.