The Bank of England Prudential Regulation Authority (PRA) has released feedback to responses to Consultation Paper (CP) 4/19 ‘Liquidity risk management for insurers’, which sought industry perspectives on a draft Supervisory Statement (SS) that outlined the PRA’s expectations on insurers’ approaches to managing liquidity risk.
The PRA received a total of thirteen responses to CP4/19. It’s proposals were generally welcomed by respondents, with a number of observations and requests for clarification made. The PRA has considered these responses and has made some changes to its draft policy
Among other changes, the PRA’s expectations surrounding the definition of risk limits within an insurer’s liquidity risk appetite framework have been further clarified, in addition to the role of the board in managing liquidity risk. The function and characteristics of the liquidity buffer have also been clarified, in response to industry feedback received.
To access the full policy statement, click here.