The Prudential Regulation Authority intends to launch a pre-application process for the matching adjustment (MA), as it has done for internal models.
In a letter sent to insurance directors on 19 August, the regulator said the exercise is to be conducted in the first quarter of 2015.
The announcement comes as the industry continues to fret about the interpretation of the rules concerning the application of the MA, which has been one of the key debating points for the UK in Solvency II negotiations.
The MA is an adjustment to the curve used to discount the value of liabilities. It is designed to shield the balance sheets of insurers with long-term business from short-term market volatility.
Insurers intending to use it must meet a stringent list of conditions and they are required to obtain prior approval from supervisors. The formal approval process is expected to last six months.
In June the PRA invited firms to make a trial submission of information for MA applications, to help it to decide on the fine-details of the process of application. This will be the subject of a paper to be published in October.
The pre-application process will go some way in placating firms' concerns on this issue. It will not only allow the regulator to anticipate some of the approval work necessary for the formal process, but it will also enable it to flag up flaws in insurers' applications, giving firms time to make adjustments necessary to secure approval before Solvency II goes live in January 2016.
The PRA said it plans to provide details on how to participate in the pre-application process and the exact timing of the exercise before the end of the year.
The letter also enclosed a table with key dates for the rest of the year about the implementation of Solvency II.
In October, information on other approval processes, including the approval of undertaking-specific parameters, will be released. Details on the volatility adjustment, transitional measures and group supervision will be provided in the final quarter of the year.
The regulator also announced that its Solvency II conference will take place on 17 October. Originally, it was expected to take place in November.
Companies:PRA
