As a compliance consultant working closely with UK insurers, I always pay close attention to the PRA’s annual supervisory priorities. The letter dated 15 January 2026, sent by Gareth Truran, Executive Director of Insurance Supervision, and Shoib Khan, Director of Insurance Supervision, is particularly important reading for boards and senior management teams as they set their agendas for the year ahead.
The letter sets out the Prudential Regulation Authority’s supervisory priorities for 2026, and while much of the direction will feel familiar, the message is clear: the PRA expects firms to remain disciplined, resilient, and forward-looking in an increasingly uncertain environment.
The PRA’s overarching priorities
From my perspective, the PRA’s priorities are firmly anchored to its enduring supervisory aim — ensuring that insurers can provide financial protection and security to policyholders in both good times and bad, in line with its primary objectives.
Several themes are a continuation of those highlighted last year, reflecting structural trends that firms are still grappling with. These include:
- Continued pressure in the bulk purchase annuity (BPA) market
- A softening underwriting cycle across parts of the general insurance market
- The ongoing need for investment in operational resilience
What feels more pronounced this year is the emphasis on uncertainty. The PRA explicitly references an environment shaped by elevated geopolitical tensions and sovereign debt pressures. In practical terms, I read this as a reminder that firms must be able to articulate how these risks feed into their business models, strategies, stress testing and downside scenarios — and, crucially, how governance and controls respond when those risks crystallise.
Resilience is also framed as a contributor to sustainable economic growth, linking directly to the PRA’s secondary objectives. The regulator continues to signal a willingness to adapt its supervisory approach, including changes to Periodic Summary Meeting (PSM) cycles, to support innovation while maintaining prudential standards.
Life insurance: sustainability and long-term risk
Across the economy, demand for pension saving, de-risking solutions and long-term investment remains strong. The PRA sees the life insurance sector as well-positioned to meet these needs — but only if it does so sustainably.
From a compliance standpoint, the regulator’s expectations here are consistent: firms must balance growth and innovation with policyholder protection, safety and soundness, and financial stability.
The PRA points to the Solvency UK reforms implemented in 2024, and the subsequent launch of the Matching Adjustment Investment Accelerator, as key enablers. These changes are intended to support the industry’s commitment to investing in UK productive assets, but they also come with heightened supervisory scrutiny.
Unsurprisingly, the BPA market remains an area of particular focus. Given the long-term nature of the liabilities, evolving investment strategies, and intensifying competition, firms operating in this space should expect continued challenge around risk management, asset-liability matching, and governance.
General insurance: discipline in a softening cycle
In the general insurance market, the PRA observes a continuing softening of the underwriting cycle across many lines of business. In my experience, this is where boards can sometimes underestimate supervisory concern.
The PRA is explicit that pricing pressure, weakened terms and conditions, and reserving risk are live issues — particularly in wholesale lines within the London Market, as seen in recent reinsurance renewal seasons.
The expectation is clear: boards must demonstrate robust underwriting discipline, with pricing and reserving decisions that remain prudent despite competitive pressures. This is not an area where firms should expect regulatory tolerance for short-term commercial trade-offs.
Cross-cutting supervisory themes
The letter reiterates several ongoing priorities that firms are expected to continue focusing on, including:
- Operational resilience
- Solvent Exit Planning
- Artificial Intelligence
- Facilitating competition, international competitiveness and growth
In my view, these are no longer “thematic” issues — they are core components of effective governance and risk management. Firms should be prepared to evidence progress, not just intent, in each of these areas.
Changes to the supervisory approach
One practical development that will affect many firms is the continued move away from annual PSM cycles. Having already transitioned some firms to a two-year cycle, the PRA plans in 2026 to extend this approach to all firms that remain on an annual cycle.
This reflects the longer-term nature of supervisory workplans and is designed to allow both firms and supervisors to deploy resources more effectively. That said, fewer formal touchpoints should not be interpreted as lighter supervision — firms will still be expected to manage risks proactively and remediate issues promptly.
What firms should take away
Taken together, this letter — alongside each firm’s individual PSM letter — provides a clear signal of the PRA’s planned supervisory focus for 2026. For boards and senior management, the message is straightforward: stay resilient, stay disciplined, and be prepared to demonstrate how strategy, governance and risk management align with a challenging and evolving external environment.
