Terms of Reference

Purpose

The purpose of the ISG is to inform and help the FSA formulate its policy prior to consultation, it does not replace consultation so may not definitively resolve any matters discussed.

The ISG is a pre-consultation forum for discussing:

  • policy issues arising from CEIOPS work on the Solvency 2 project;
  • policy issues arising from the implementation of the Reinsurance Directive;
  • the FSA's articulation of its potential solutions in Integrated Prudential Source Book (PRU) text;
  • issues regarding the practical implementation of, and monitoring of compliance with, insurance policy in the PRU; and
  • domestic insurance policy issues (e.g. PRU and IPRU (Ins)) not associated with Solvency 2 or the Reinsurance Directive.

The ISG will be the medium by which the FSA will:

  • collaborate with firms to develop FSA input into CEIOPS discussions on Solvency 2;
  • discuss its approach to, and process for, developing rules and to identify areas where guidance may need to be issued to implement the Reinsurance Directive;
  • collaborate with firms to develop its policy for insurers in the PRU;
  • collaborate with firms to address issues of policy implementation, and the monitoring of compliance with, policy for insurers in the PRU; and
  • identify any other substantive insurance policy issues.

Remit

The ISG will be responsible for:

  • Solvency 2;
  • The Reinsurance Directive;
  • The Prudential Sourcebook for Insurers, including the twin-peaks approach, non-life ECR, and ICAS;
  • IPRU (Ins) including requirements for non-Directive Friendly Societies (ie. IPRU(FSOC)).

Responsibilities: FSA

The FSA will:

  • ensure that issues raised by firms are given proper consideration, are discussed at the appropriate level within the FSA, and that appropriate action is taken to address them;
  • share with the ISG members its policy proposals and rationale;
  • highlight and discuss implementation issues;
  • ensure that firms' views on policy options are factored into the FSA's on-going discussions on Solvency 2 in CEIOPS; and
  • ensure that firms receive feedback at the ISG meetings on the way in which the issues they have raised have been factored into the FSA's policy.

Within five working days of an ISG meeting, the FSA will:

  • circulate minutes from the meeting, comprising action points for the FSA and ISG members; and
  • propose a draft agenda for the next meeting.

Within ten working days of an ISG meeting, the FSA will:

  • publish on its website the final version of the ISG minutes.

Five working days before an ISG meeting, the FSA will:

  • supply ISG members with the agreed meeting agenda;
  • provide policy papers explaining the policy issues that the FSA is seeking to resolve and the proposed solutions to them.

Responsibilities: ISG members

The ISG members are responsible for:

  • developing the ISG agenda, providing views on the appropriateness, and practicality, of the FSA's proposed solutions to policy issues;
  • where proposals are considered inappropriate or impractical, offering alternative solutions to policy issues;
  • reviewing and providing suggestions for improvements to Handbook text; and
  • assisting the FSA in assessing the overall cost and benefits for UK firms of implementing policy proposals.

Meeting frequency

ISG meetings will be held monthly on the first Monday of each month, and ad hoc meetings may be held where necessary.

Circulation of ISG papers

ISG members are free to circulate papers within their organisations and, in the case of trade associations, around trade association members to gauge industry views.

Composition

The Standing Group will be chaired by Sarah Varney. FSA Policy Advisers working on the Solvency 2 project, the Reinsurance Directive, Integrated Prudential Sourcebook, IPRU (Ins), IPRU (FSOC) and CBA / Quantitative Impact Studies will attend.

The industry participants will be drawn from non-life and life insurers, reinsurers, friendly societies, Lloyd's/IUA and trade associations.

Disclaimer

The papers and meetings of the group are intended to enhance continued discussion of the topics rather than to present a comprehensive account of the issues or a set of agreed conclusions. The minutes of the meetings report the discussions of the group, but neither the papers or minutes nor any reported remarks by anyone present at one of those meetings should be seen as representing either the formal positions of the member institutions or of the FSA. The FSA's policy proposals will be subject to consultation in the normal way.