4 Supervisory activity (paras. 104-131)
This section describes how we supervise insurers in practice, including the tools we use and the legal and enforcement powers available. In-line with our key principles, this engagement will be proportionate to the size and potential impact to financial stability of any given firm. Our supervision is focused on the key risks that a firm has the potential to pose to financial stability. For UK insurers, our assessment covers all entities within the consolidated group.
104. As set out in Section 2, our supervisory approach follows three key principles: (i) judgement-based; (ii) forward-looking; and (iii) focused on key risks. These principles require us to utilise a broad range of tools in gathering quantitative and qualitative data to inform our supervisory judgements. Box 3 outlines our approach to authorising new applicant insurers, while the remainder of Section 4 refers to our engagement with insurers following Authorisation.
Box 3: Authorising new insurers
Firms wishing to effect or carry out contracts of insurance must apply to us for authorisation. The application process is a joint assessment between us and the FCA, and we have established a New Insurer Start-Up Unit to help prospective insurers, including a guide. We assess applicant firms from a prudential perspective, with the focus of the FCA being on conduct. The applicant firm will only be authorised if both regulators are satisfied that the insurer will meet their respective Threshold Conditions, at the point of authorisation and on an ongoing basis. As provided for in the MoU between the PRA and FCA, we lead and manage a single administrative process, and the PRA, as the lead regulator for dual-regulated firms, will act as decision maker on the application.