Now that sounds like rather a mouthful, but fortunately the Bank’s Independent Evaluation Office (IEO) has today published a thorough evaluation of the PRA’s approach to its Insurance Objective. The Bank set up the IEO in 2014 to help Court evaluate the Bank’s performance. Early last year, Court asked the IEO to consider whether we are doing enough of the right sorts of things to deliver the Insurance Objective. The IEO’s report includes a number of interesting findings, which I welcome and find consistent with my own observations from my time as Executive Director of Insurance Supervision. In particular, the IEO found that there is a lot of activity going on in pursuit of policyholder protection. This comes as no surprise to me. The PRA’s insurance supervisors, actuaries and other professionals have in my  9  http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech877.pdf Source: ABI factsheet https://www.abi.org.uk/~/media/Files/Documents/Publications/Public/2016/KeyFacts/ABIUKInsuranceAndLongTermSavings-KeyFacts.pdf 11 As at 2016Q2, based on insurers’ reporting to the PRA 10  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  experience a strong public-service ethos. They are strongly motivated to protect insurance policyholders, which is for some a more human motivation than safety and soundness. However, the IEO found that we could do more to explain what we mean by “policyholder protection”. Some of this is straightforward, such as ensuring staff have clear legal analysis and understand where and when the PRA should and should not act, and we confirm in our response to the IEO’s report that we will improve that analysis and training where required.

Perhaps they are just being polite but it seems to me that, when faced with the 4 5  http://www.bankofengland.co.uk/pra/Documents/regulatorydata/capital/2016/sep/bsrcrelease1609.pdf CP48/16, http://www.bankofengland.co.uk/pra/Pages/publications/cp/2016/cp4816.aspx 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  cold reality of taking on these risks, insurers have often simply concluded that the yields available are insufficient compensation for the risks incurred. An over-zealous approach from the PRA? I now turn to the other general theme from TSC submissions – whether or not we at the PRA have implemented Solvency II over-zealously. Or put another way, have we ‘gold–plated’ the directive? You will be unsurprised to hear that I say not. As I said earlier, it is only natural that there will be tension between the regulator and firms, because our objectives may be consistent but they are different. But rather than ask you to take my word on trust, let me provide some practical examples and attempt to explain how and why we have acted in the ways we have. First, consider the challenge that the Association of British Insurers (ABI) made in its written evidence to the 6  TSC , that the Senior Insurance Managers Regime (SIMR) that we have introduced “extensively ‘gold plates’ pillar 3 requirements of Solvency II”. The SIMR is designed to ensure the individual accountability of senior managers and directors of insurers for their own conduct, for overseeing the business conduct of key individuals reporting to them, and for the ongoing safety and soundness of their firms and the protection of their policyholders.