Regulatory & PSB

The FSA requires insurance firms to comply with the Prudential Sourcebook by the end of 2004. The rules are still developing, but essentially require management to understand and control the risks of the business and translate these risks into an assessment of capital requirements.

There will also be new senior management responsibilities for actuarial work and, for with-profits business, a definition of the rights of policyholders (the principles and practices of financial management) and a new form of assessing solvency (realistic balance sheets).

PwC frequently works with the FSA, both formally and informally, and so understands the developing requirements. We specialise in the understanding and modelling of risks and capital within the environment where risks are managed. We can also assist management to understand and cope with the developing burden of regulation. These solutions ensure that the FSA’s requirements assist management in improving their businesses, rather than become an additional overhead.

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Potential issues

• You need to understand the risks facing your business (particularly investment, insurance and operational risks)
• You want to know how to model the business and its risks, so that you have a robust assessment of capital requirements
• You need to comply with FSA principle 6, Treating Customers Fairly, particularly for with-profits business, embedding it within your business
• You want to understand the actuarial and risk functions – and exercise good governance over them
• You want to make the Prudential Sourcebook work for your business, rather than become an overhead.