The PRA has published a statement setting out further information on the dynamic general insurance stress test (DyGIST) that it intends to run in 2025. As a reminder, the objectives of DyGIST are to:
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assess the UK general insurance sector’s solvency and liquidity resilience to a specific adverse scenario;
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assess the effectiveness of insurers’ risk management and management actions following an adverse scenario; and
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inform the PRA’s supervisory response following a market-wide adverse scenario.
The PRA has now confirmed that DyGIST will cover c.80% of the PRA regulated GI market and will comprise three phases:
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The ‘live’ exercise: firms will be presented with a sequential set of adverse events over a three-week period in May 2025 and will be asked to react to these as they would to real events. Firms will be asked to provide initial financial impact assessments following each event, to engage with their supervisory contacts and follow their expected management action