A UK insurer writing up to £25m of gross written premium, with no more than £50m of technical provisions, can sit outside Solvency UK. Those figures were set at the end of 2024, in the Solvency II Reform Instrument, replacing limits of €5m and €25m. Until now, nothing moved them except a fresh consultation.
On 7 October the PRA published CP13/26. It proposes that 128 fixed monetary thresholds rise automatically with UK nominal GDP, first on 1 July 2031 and every five years after. Responses are due by 7 February 2027. The insurer size test is named as one of the significant thresholds in scope, and 10 of the 52 reporting thresholds apply to insurers.
The scale of the drift is the point. Cumulative UK nominal GDP grew 85.4% between 2009 and 2024, according to the PRA data cited by Insurance Business. At anything like that pace, a fixed £25m line loses real ground within a decade, so a small home, pet or specialty carrier can cross into the full regime by standing still in real terms.
Here is the detail worth sitting with. Not every threshold cuts in the insurer’s favour. The PRA says fewer than 10% of those in scope work the other way, and some UK Solvency II standard formula thresholds could, in specific cases, raise the Solvency Capital Requirement when they are indexed. Insurers using the standard formula will want to model both directions, not assume relief.
There is a structural read across too. The small firm exclusion is not open to firms writing liability risks unless they are ancillary, so motor and liability carriers gain little from the size test itself. The benefit falls to smaller property and specialty writers, and to anyone planning growth or run off around the line.
The first move is five years away. The planning certainty starts now, and a February response is the cheapest place to argue about the thresholds that cut the wrong way.
Sources: PRA CP13/26; PRA Rulebook; Insurance Business.