PRA to run dynamic general insurance stress test in 2025 with a "significant shift" from previous exercises

The PRA has announced that it intends to run a dynamic general insurance stress test in 2025. 

Little detail has been provided at this stage, albeit the PRA explain that the dynamic nature of the 2025 exercise represents a significant change from previous exercises and will involve simulating a sequential set of adverse events over a short period of time. Consequently, the PRA intends to engage with the industry including trade bodies over the next six months, with a view to providing more details of this exercise (including participation, design, and timelines) during the first half of 2024. 

The objectives of the exercise will be to:

• assess the industry’s solvency and liquidity resilience to a specific adverse scenario; 
• assess the effectiveness of insurers’ risk management and management actions following an adverse scenario; and
• inform the PRA's supervisory response following a market-wide adverse scenario.