UK Insurers Push Back Against PRA's Dynamic Stress Test
The UK insurance industry is pushing back against the Bank of England's 'dynamic' stress test, which subjected insurers to a series of unprecedented crises in May. The Prudential Regulation Authority's (PRA) DyGIST exercise tested insurers' ability to respond in real-time to adverse conditions, with scenario details revealed only during the live exercise.
Nafisah Hussain, director of public policy at the International Underwriting Association, warned that the accumulation of scenarios in such a short time frame was 'very unlikely.' She expressed concerns that running similar tests regularly might be 'overly burdensome' and pointed out that there is only so much that regulators can infer from those results.
The industry has told the PRA that the tests put significant pressure on their internal resources, with some firms forced to bring in technical experts at short notice and cancel staff leave. Sue Dreksler, partner and head of KPMG UK's general insurance actuarial team, said, 'We don't think they'll run it again, or certainly not in this form.'