How ‘public disclosure’ is reshaping the UK’s life insurance stress tests

4most’s Head of Insurance Capital Solutions, Sheikh Yasir, recently spoke with InsuranceERM about the Prudential Regulation Authority’s (PRA) decision to publish its 2025 life insurance stress test results at the individual company level. This marks a significant shift, as the PRA has previously publicly disclosed only aggregated results.

Sheikh highlighted that public disclosure of individual firm results could be misinterpreted by the market as a ‘pass or fail.’ Therefore, it is crucial for the PRA to ensure clear communication to minimise confusion about what the results represent.

He also noted that while the PRA has been conducting sector-level stress tests since 2019, certain aspects, particularly those related to Funded Re recapture scenarios, will be tested for the first time.

You can read the full article here. 

Key dates and timeline

On July 10, 2024, the PRA published the requirements and specification of the stress tests. They have also written to firms to request technical input, giving insurers an opportunity to provide feedback on the proposed guidelines and specifications ahead of the formal launch of the life insurance stress test (LIST) in January 2025.

The PRA has set the deadline to provide technical input as September 6, 2024. Here is the timeline:

• July 2024: The PRA requests technical input from firms
• January 2025: Launch of the exercise
• Q1-Q2 2025: Submission of results to the PRA
• Q3 2025: Validation and analysis by the PRA
• Q4 2025: Publication of findings

Get in touch if you are interested in learning more about how 4most can help your organisation navigate these regulatory changes – info@4-most.co.uk.