Professional & Financial Services

Insurer authorisation and prudential rules

Effecting and carrying out contracts of insurance are PRA-regulated activities: an insurer or reinsurer needs Part 4A permission, applied for through the Prudential Regulation Authority with the FCA's consent, and must then hold capital and governance to the Solvency UK prudential standard. Life insurers have additional long-term fund rules, and all insurers must meet operational resilience requirements.

UK-wide
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UK-wide

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This guide covers the prudential side of being an insurer or reinsurer — getting authorised and staying financially sound. It applies UK-wide. The conduct side — how you treat customers — is in insurer conduct and accountability rules; work through both. Friendly societies and mutual insurers carry the same FSMA dual-regulated regime in substance, with some tailoring for their constitutions.

Get authorised as a dual-regulated firm

You cannot carry on insurance business without permission: effecting and carrying out contracts of insurance are PRA-regulated activities, so authorisation is led by the Prudential Regulation Authority, with the FCA's consent — you deal with both regulators from day one. Carrying on a regulated activity without authorisation is a criminal offence — see the consequences of unauthorised business.

Reinsurers are authorised the same way

Reinsurance — insuring other insurers — is itself effecting and carrying out contracts of insurance, so a pure reinsurer needs the same PRA-led Part 4A permission and prudential supervision. If you accept risk through the Lloyd's market instead, the market has its own structure — see accessing the Lloyd's of London insurance market.

Hold capital to the Solvency UK standard

Once authorised, your balance sheet is supervised continuously. The Solvency UK regime — the reformed successor to Solvency II — sets your capital requirements, governance standards and reporting to the PRA.

Life insurers: ring-fence the long-term fund

If you write life or other long-term business, the assets backing long-term policyholder liabilities have their own protections — separation from general business, restrictions on use, and with-profits governance where relevant. If your pension products are used by employers for automatic enrolment, the qualifying-scheme requirements also apply — see the qualifying-scheme section of run an occupational pension scheme; the rest of that guide is for trust-based schemes.

Meet operational resilience requirements

Insurers must identify their important business services, set impact tolerances for disruption, and be able to stay within them — a joint FCA and PRA regime. Cyber risk is central to it: see cyber security for financial services firms.

Next steps

Work through your conduct-side duties in insurer conduct and accountability rules, make sure the shared duties in run a compliant insurance or pension business are in place, then confirm everything with the insurance and pension compliance checklist.