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International Insurance and Reinsurance News, Trends, and Cases

Posted in Market developments, Poland, Regulatory and legislative updates

The Polish regulator’s position on insurance companies publishing their standard contracts on their websites

Background to the issuing of the Polish regulator’s position

Based on the new regulation in the Polish insurance market that entered into force on 1 January 2016, the general terms and conditions of insurance (“GTC“) as well as other standard contracts must be published by insurers on their websites. The Polish regulator (“KNF“) noticed, however, that the fulfilment of this obligation differed among insurers. Consequently, the KNF noted the need to unify the practice in these terms and recently issued its position concerning insurance companies publishing their standard contracts on their websites. The document is available here  in the Polish language version only. Continue Reading

Posted in Regulatory and legislative updates, UK

UK: FCA consults on its approach to reviewing Part VII transfers of insurance business

On Monday 15 May 2017 the Financial Conduct Authority (FCA) published a consultation paper on new proposed guidance on its approach to reviewing applications to transfer insurance business under Part VII of the Financial Services and Markets Act 2000 (FSMA) (a Part VII Transfer).  Comments are requested by 15 August 2017.

In accordance with the terms of a Memorandum of Understanding between the FCA and Prudential Regulation Authority (PRA), the PRA takes the lead on managing the process of a Part VII Transfer and has responsibility for approving the appointment of an independent expert, approving notices, issuing the necessary certificates and corresponding with overseas regulators if necessary. The FCA has an active role in the process and must be consulted with by the PRA at all stages.  Both regulators may provide reports to the Court and attend the final Court hearing. Continue Reading

Posted in European Union, Market developments, Regulatory and legislative updates, UK

Industry at odds with regulators over new framework for insurance recovery and resolution

There is an emergent divergence of opinion between trade body Insurance Europe and regulators. Will calls for further regulation create more substantial fissures?

Insurance Europe, a trade body comprised of insurance associations representing approximately 95% of European premium insurance income, recently issued a press release reaffirming its stance on EU proposals for harmonising recovery and resolution frameworks for insurers. Insurance Europe argues that proposals for substantially changing recovery and resolution rules for insurers are unnecessary. Rather, it asserts, current safeguards provided under Solvency II (a European framework governing capital adequacy and risk reduction for insurers) are sufficient.  Insurance Europe’s announcement was borne out of a discussion paper from the European Insurance and Occupational Pensions Authority (“EIOPA”), in which it considered harmonising national recovery and resolution frameworks for insurers in the EU. EIOPA suggested “minimised harmonisation” whereby EU member states would be enabled to implement new regulatory measures to their respective insurance markets.  Click here for more details of the EIOPA proposals and Insurance Europe’s response.

 

 

Posted in Asia, China and Hong Kong, Market developments

The future of Hong Kong’s insurance industry – New focus on reinsurance and captives?

The Hong Kong Financial Services Development Council, an advisory body to the government, has recently released a report on the Hong Kong insurance sector. Its key recommendations are:

  • Boosting the Hong Kong reinsurance market, including by negotiating preferential treatment for Hong Kong reinsurers under C-ROSS, China’s risk-based capital regime, and by extending tax incentives for offshore reinsurance to life reinsurance and to direct insurers conducting reinsurance business.
  • Turning Hong Kong into a leading marine insurance market, including by negotiating preferential treatment for Hong Kong insurers under C-ROSS, creating tax incentives for marine insurance and marketing Hong Kong as a marine insurance hub.
  • Establishing Hong Kong as a leading domicile for captives through regulatory guidance on captive management and operations, proactive support by the insurance regulator and enhanced marketing. The development of the Hong Kong captive industry has been a focus for some time. Significant regulatory and tax concessions for captives have been in place for a number of years, and in 2012 the Chinese central government encouraged Mainland companies to set up their captive insurers in Hong Kong. However, despite those measures, only three captives have been established in Hong Kong to date. As the report correctly identifies, a critical mass will typically have to be reached in order for a jurisdiction to become a hub for captives. It is doubtful whether that critical mass can be achieved in Hong Kong without the Chinese government taking active steps to promote Hong Kong as a captive hub.

Continue Reading

Posted in Asia, China and Hong Kong, Regulatory and legislative updates

Hong Kong – The new independent insurance regulator takes charge

It has been announced that the new Independent Insurance Authority for Hong Kong (“IIA“) will assume its functions on 26 June 2017 (the “Commencement Date“), replacing the Office of the Commissioner of Insurance.

From the Commencement Date, the appointment of “key persons” (such as officers responsible for risk management, compliance, financial control, internal audit and the actuarial function of authorised insurers) will be subject to approval by the IIA on the basis of “fit and proper” criteria. The same requirement will apply to new directors of Hong Kong incorporated insurers.  The existing approval regime only applies to certain controllers, chief executives and managing directors of authorised insurers. Continue Reading

Posted in Asia, China and Hong Kong, Regulatory and legislative updates

China: CIRC Publishes Final Requirements for Collateral in Cross-border Reinsurance Transactions

On 9 August 2016, the China Insurance Regulatory Commission (“CIRC“) issued the Notice on Matters Relating to Collateral Provided by Offshore Reinsurers (Draft) (the “Draft Notice“) for public consultation. On 13 March 2017, CIRC released on its official website the final version of the notice (the “Final Version“), which has been effective since 23 February 2017. The Final Version sets out the requirements that collateral provided by offshore reinsurers must meet in order for a lower risk factor to be applied by the ceding company to the reinsurance under China’s risk-based solvency regime, C-ROSS.  The key features summarized in our previous blog post (please see full text here) remain the same in the Final Version, except for the following points: Continue Reading

Posted in Market developments, Regulatory and legislative updates, UK

Upcoming Webinar: Insurance M&A – recent developments in the sector

Tuesday 23 May 2017 17.00 – 17.50BST/18.00 – 18.50 CEST/12.00 – 12.50 EDT

What can we expect from M&A in the insurance industry in 2017?  Will businesses pause in pursuit of their M&A plans as a consequence of the forthcoming UK elections, Article 50 negotiations and Trump’s agenda amongst other factors or will M&A activity continue?

Members of our global insurance team in London and New York will host this webinar together with representatives from KPMG, to discuss current trends and new developments in M&A in the insurance industry.

Click here for further details and to register.

Posted in Regulatory and legislative updates, UK

UK: Damages for late payment of insurance claims – comes into force today

From today, insurers in the UK will be required to pay valid insurance claims within a reasonable time and may be hit with damages claims from insureds, if they fail to do so.

This change has been brought about by the Enterprise Act 2016, which inserts a new section 13A into the Insurance Act 2015 (the “Act“).  The effect of this change is that it will be an implied term of every contract of insurance (both consumer and business) that the insurer shall pay valid claims within a “reasonable time”.  Breach of this term will entitle an insured to damages for late payment, in addition to the proceeds of the claim itself plus interest. Continue Reading

Posted in Asia, China and Hong Kong, Regulatory and legislative updates

China’s draft regulations to affect investment in Chinese insurance companies

On 29 December 2016, the China Insurance Regulatory Commission (“CIRC“) commenced public consultation on the amended Administrative Measures for Equities of Insurance Companies (Draft for comments) (the “Draft Measures“), setting out a new regulatory regime for investment in Chinese insurance companies.

Lowered Maximum Shareholding Percentage

The market sees the Draft Measures as CIRC’s reaction to the series of acquisitions of major listed insurance companies in the secondary market since 2015, which are widely reported in the media and viewed critically by the regulator in terms of the identity of the purchasers (being often from outside the industry) and their intention for such acquisitions (suspected as using the listed insurance company as their own financing platform). In light of this, CIRC has changed the limit on the shareholding by a single shareholder in a Chinese insurance company from the current 51% (for those having satisfied certain requirements, including acting as shareholders of an insurance company for at least three years and being approved by CIRC) to one-third, subject to certain exceptions.  The limit on the maximum shareholding percentage continues to apply to the aggregated equity interest held by related parties. Continue Reading

Posted in Regulatory and legislative updates, UK

UK: FCA General Insurance and Protection Sector Views 2017

The FCA has outlined the current trends, risks and its overall assessment of the General Insurance sector in its 2017 Sector Views, published last week.  Some of the key points are highlighted below:

Technological Advances as Drivers of Change

The General Insurance sector has been affected by technological advances which have given firms access to an unprecedented amount of new consumer data. In retail, car-telematics are giving insurers sophisticated data on their customers’ driving behaviour and risk profiles. In the protection market, insurers can use Big Data to predict life expectancy and income security with more accuracy.  This is likely to have an impact on premiums for customers, introducing more marked price differences based on the particular risk a customer presents.  In addition, some insurers have increased their product range as they have been able to conduct more sophisticated analytical modelling, capturing risks that have previously been “unknowable” and therefore allowing for more accurate pricing.

It is the FCA’s view that price comparison websites have become central to the distribution of core products, especially in retail insurance. Insurers now find it harder to reach customers in the motor and home insurance markets without paying to list on price comparison websites. Continue Reading