Which organization is responsible for the day-to-day regulation of UK insurance companies under Solvency II?

The correct answer is the PRA, or Prudential Regulation Authority. The PRA is tasked with the day-to-day regulation of insurance companies in the UK, especially in the context of Solvency II, which is a legislative framework for insurance and reinsurance firms in the European Union, focused on improving the protection of policyholders. The PRA ensures that insurance companies maintain adequate capital and risk management processes to meet their obligations to policyholders.

This regulation is vital in promoting the stability of the financial system, overseeing insurers to make sure they are resilient and can withstand financial shocks. In practice, the PRA assesses the financial soundness of firms, promoting strong governance and ensuring they manage risks effectively.

Other organizations mentioned play different roles: the FSA (Financial Services Authority) is no longer in operation as it has been replaced by the PRA and FCA to enhance the regulatory framework. The FCA (Financial Conduct Authority) is focused more on consumer protection and market integrity rather than the prudential regulation of insurers. The ABI (Association of British Insurers) is a trade association representing the insurance industry but does not engage in regulatory oversight.