Regulatory Alerts2026-04-29
Added · Updated
PRA Publishes Plans to Support Resilience in the Life Insurance Industry
The Prudential Regulation Authority (PRA) has issued Consultation Paper 8/26 proposing targeted changes to address significant risks arising from the continued growth of funded reinsurance exposures in the UK life insurance market. Specifically, the PRA intends to modify the calculation of the counterparty default adjustment (CDA) for funded reinsurance under Solvency UK, aligning its treatment more closely with economically similar assets to better reflect underlying risks and reduce incentives for excessive use. These proposals, which would apply from 1 July 2027 and are estimated to increase capital held for average funded reinsurance transactions from 2-4% to approximately 10%, aim to enhance the long-term resilience of the UK life insurance market and encourage direct UK investments.