As financial markets continue to face periodic shocks, UK regulators are increasing their focus on liquidity risk management, especially among larger insurers with complex portfolios.
In the consultation paper, CP19/24, the Prudential Regulation Authority (PRA) set out new proposals to improve the quality and frequency of liquidity data collected from insurers. The goal is clear: better reporting, earlier intervention, and stronger resilience.
But what does this mean in practice for insurers, and how can firms prepare ahead of the implementation deadline?
Why Is This Happening?
The PRA’s proposals are shaped by hard lessons from recent events—including the COVID-19 market turbulence and the 2022 Liability Driven Investment (LDI) crisis.
These episodes highlighted:
- Gaps in timely liquidity data
- Limited visibility over derivatives and collateral exposures
- Inconsistent reporting practices across firms
As a result, the PRA now aims to close those gaps by introducing new, standardised templates to improve the regulator’s ability to assess systemic liquidity risks, particularly during periods of market stress.
Who Is in Scope?
The proposals primarily target larger, more complex firms, particularly those with significant exposure to financial market activity.
You’re likely to be in scope if you meet all the following conditions:
- A UK solo-regulated Solvency II firm
- Average assets over £20 billion
- Derivatives exposure exceeding £10 billion
- Securities lending or repo activity exceeding £1 billion
While the proposals don’t currently apply to smaller insurers, the PRA has signalled it may expand scope in future based on market developments.
What Will Change?
Insurers in scope will be required to submit new liquidity templates covering:
- Derivatives activity and related cash flows
- Expected cash flows from insurance and financial transactions
- Liquidity resources, including liquid assets and committed facilities
- Contingency funding plans and stress period readiness
Importantly, the PRA is reserving the right to require daily reporting during periods of financial stress, mirroring expectations already in place for banks and asset managers.
What Should Insurers Do Now?
Firms that may fall into scope should begin planning now, long before the end-of-year deadline.
Here are three key steps to take:
- Assess Your Exposure
Determine whether your assets, derivatives, or repo/securities lending positions meet the PRA’s thresholds. - Map Your Data Sources
Determine if your current systems can support the new templates, specifically in terms of derivative cash flows, collateral movements, and liquid asset classifications. - Prepare for Operational Change
Consider the governance, control, and reporting workflows required to meet monthly, quarterly, and potentially daily submissions.
This isn’t just a regulatory exercise; it’s also an opportunity to strengthen your firm’s internal view of liquidity risk and operational preparedness.
What’s Next?
The PRA’s consultation closed on 31 March 2025, with implementation expected by 31 December 2025. Insurers need to assess their systems, engage with internal stakeholders, and prepare for compliance.
Final thoughts
Liquidity risk is no longer a banking-only issue. As the insurance landscape becomes more financially complex, the PRA is making it clear that robust, transparent liquidity risk reporting is essential.
Firms will not only be required to comply with CP19/24, they’ll also build stronger risk awareness and resilience across their organisation.
At Brighter Consultancy, we work closely with insurers to operationalise regulatory change with clarity and confidence. If you’re navigating Solvency II, CP19/24, or broader liquidity risk transformation, we’re here to help.
