In its 2026 regulatory priorities, the Prudential Regulation Authority (PRA) noted that UK insurers face an uncertain environment with heightened geopolitical tensions and heightened sovereign debt pressures, stressing the need to assess the impact on business models and ensure robust risk management, governance and controls, including for downside scenarios.
The PRA’s 2026 priorities outline specific industry focus areas for banks, building societies, insurance companies and other regulated companies.
The regulator also said it plans to streamline the regulatory process by moving some activities, such as periodic summary meetings (PSMs), to a two-year cycle.
In recent years, the PRA has moved some companies from an annual to a biennial PSM cycle.
The PRA said this adjustment has proven to be effective as it reflects the long-term nature of the supervisory work program and enables firms and regulators to focus resources more effectively to identify and address key risks.
“As a result, we plan to transition to a two-year PSM cycle starting in 2026 for all firms still using an annual cycle. Reducing the number of PSMs and associated communications and processes will also reduce the regulatory burden on firms, in line with our secondary objectives of promoting UK competitiveness and growth,” the PRA said.
In a letter to the CEOs of PRA-regulated insurance companies, the agency also noted that its priority is to ensure that the industry provides financial protection and security to policyholders in all circumstances, in line with its core objectives.
The PRA added that some of the priorities are consistent with those highlighted last year and reflect the continuation of current market trends.
“These trends include continued pressure in the bulk purchase annuity (BPA) market, weakness in the underwriting cycle in the general insurance market and the need for companies to continue investing in the resilience of their operations,” the PRA said.
In the general insurance market, regulators are seeing continued weakness in the underwriting cycle across many business areas, which could put pressure on pricing, terms and conditions and reserve levels.
The PRA continued: “This trend is particularly evident in some wholesale businesses in the London market, as illustrated by the recent reinsurance renewal season.”
As a result, the Prudential Regulation Authority said it expects boards to maintain strict underwriting discipline in the current weak environment and ensure pricing and provisioning fully reflect market trends.
Focusing on the BPA market in the life insurance priority sector, PRA noted that the sector remains highly competitive, with both established players and new entrants responding to growing demand for pension acquisition solutions from corporate sponsors.
The PRA said: “We remain concerned that competitive pressures will incentivize firms to weaken pricing discipline or risk management standards. We will continue to actively engage with the industry on these market trends to understand firms’ views on these issues. Firms should ensure that their internal risk management frameworks and controls are sufficiently robust to assess and manage the risks they assume, including increased pricing pressure and consideration of more complex transaction features.”
The agency also discussed the increasing use of funded reinsurance (FundedRe), a theme it highlighted last year when it tightened its stance on UK life insurer funding and offshore financing.
As the BPA market continues to grow rapidly, this move is designed to balance promoting innovation and maintaining financial stability.
“While FundedRe can provide additional capital and asset classes, it also introduces significant risks that must be carefully managed,” the PRA said.
It continued, “Since September 2025, we have held a series of roundtables with businesses to build consensus on these issues and enable us to consider whether further policy action is required.
“This engagement has proven helpful in identifying the need for policy action in this area and discussing a range of ways to achieve this. We are actively reflecting on the views provided by businesses during the roundtable and will use these inputs to help shape our policy recommendations. We expect to provide a further update in the second quarter.”
