The PRA has published a consultation on its proposal to require an external audit of elements of the Pillar 3 disclosure under Solvency II.

The PRA is proposing to require an external audit of quantitative and qualitative information included in the ‘Valuation for solvency purposes’ and ‘Capital management’ sections of the Solvency and Financial Condition Report (SFCR) required of Solvency II firms. Where Solvency II requires the production of the SFCR, the PRA proposes to require the relevant elements to be externally audited, subject to two exemptions:

  • The SCR will be exempt from an external audit if calculated using an approved full or partial internal model; and,
  • Where sectoral rules are used in the SFCR, this information would not be subject to an external audit.

The requirement for external audit would be implemented from 30 June 2016 for firms reporting under Solvency II. It would first impact insurers for accounting years ending on or after 30 June 2016. Feedback on the proposal, draft rules and draft supervisory statement are sought by 19 February 2016.

For further information: CP43/15: Solvency II: external audit of the public disclosure requirement