In its recently published 2017/2018 Business Plan the FCA outlines its priorities for the general insurance sector over the coming year and beyond.
In general, the Business Plan identifies a shift in focus towards market structures, incentives and distribution and away from issues directly affecting retail/SME consumers (though the FCA will continue to monitor and review its previous work in this area):
“The general insurance and protection (GI&P) sector protects individuals and businesses against the cost of uncertain and often unpredictable events. Without the protection of insurance, many social and economic activities could not take place. It is vital that this market, including the wholesale market underpinning it, works well.” Continue Reading
The Policing and Crime Act 2017 (the “2017 Act“) has introduced measures to strengthen the effectiveness of the UK’s financial sanctions regime. The delay in the implementation of UN sanctions as a result of EU processes is one strand that has been addressed and will be discussed in greater detail below. The 2017 Act also includes provisions targeted at strengthening penalties available to the Office of Financial Sanctions Implementation (“OFSI“) – our blog post on this can be found here. Continue Reading
The Policing and Crime Act 2017 (the “2017 Act“) came into effect on 1 April 2017, and introduced a number of changes, including new powers for the Office of Financial Sanctions Implementation (“OFSI“) to impose increased monetary penalties. Those penalties are the greater of £1 million or 50% of the value of the breach for breaches of financial sanctions.
OFSI has recently published guidance on how it will apply these powers. OFSI can only impose a monetary penalty if the person who has breached the prohibition knew, or had reasonable cause to suspect, that the person was in breach of the prohibition (which is an objective test). If this test is satisfied, OFSI will review the seriousness of the breach to determine the level of monetary penalty to impose which is informed by taking into consideration aggravating and mitigating factors of the particular case. There are reductions available if there has been voluntary disclosure of the breach.
Companies should now work with their compliance teams to ensure that they have in place adequate systems and controls to identify and mitigate any sanctions risks and report breaches. The new guidance, along with the use of deferred prosecution agreements suggests that OFSI will actively pursue breaches of sanctions in light of the large maximum penalties available to it. Continue Reading
Be aware of drafting (or seeking to interpret) a contractual indemnity provision in isolation. Appreciating the wider contractual context will avoid surprises.
The Supreme Court has held that the indemnity clause in an SPA did not operate to indemnify the buyer of an insurance broker against compensation paid to customers as a result of mis-selling. Continue Reading
After one year from the last coordinated intervention of IVASS and the Bank of Italy in this sector aimed at better protecting policyholders/borrowers, IVASS issued a new letter to the market addressed to insurance undertakings and intermediaries enrolled in section D of IVASS Registry of insurance intermediaries (banks and financial intermediaries) in relation to policies linked to loans. The aim of the IVASS letter is to highlight to insurance undertakings their obligations in case of early partial repayment of the loan by the borrower (and not only in case of full early repayment) already set out by both IVASS and the Bank of Italy as a critical issue in relation to these contracts. Indeed, as a result of a recent investigation carried out on this market segment, IVASS discovered that many insurers not only did not reimburse the relevant portion of the premium amount but did not even provide for this in the policy conditions of their PPI products. Continue Reading
On Thursday 30 March we held our latest Brexit webinar for insurance companies.
The UK has two years to negotiate and reach an exit deal, unless all EU Member states unanimously agree to extend this deadline. Many insurance companies will need to start thinking about the implementation of their plans. They also need to consider what the legal and regulatory landscape will look like after Brexit. During the webinar, members of our global insurance sector team considered:
- The timetable and alternatives for restructuring
- The importance of equivalence
- The EU/US Covered Agreement
- UK restructuring regime outside the EU
- Impact of Brexit on sanctions law
- The General Data Protection Regulation
- Impact of Brexit on competition law
To view the webinar recording please click here.
Earlier this week, the Supreme Court overturned the Court of Appeal’s judgment in AIG Europe Limited v Woodman and others UKSC 2016/0100, ruling on how claims arising from similar acts or omissions in a series of related matters or transactions should be aggregated for the purposes of a per claim limit. The court held that whilst there must be some connection between the matters or transactions in order for claims to be aggregated, each case will turn on its specific facts. Continue Reading
To supplement its work on the relationship that the UK might seek to have with the EU following Brexit, the Treasury Committee of the House of Commons established in September 2016 an inquiry into EU insurance regulation.
The inquiry has four main objectives:
- to consider the options for the UK insurance industry that are created by the decision to leave the EU;
- to assess any impact of Solvency II on the competitiveness of the UK insurance industry;
- to examine the impact of Solvency II on the role of insurance in meeting the needs of UK customers and the wider UK business economy; and
- to assess any learning for regulators and industry from the introduction of Solvency II.
We welcomed over 100 clients to our Global Insurance Summit last month. They gathered, in the heart of the City of London, to hear from industry leaders, academics and new market players. The discussions centred around the changes we’re seeing around the world – whether political, economic, or technological. Our keynote speakers, Lord Adair Turner and Sir Christopher Meyer, focused on the macro picture: the outlook for the global economy, and how UK/U.S. political relationship will evolve with President Trump and Prime Minister May. You can read our first Global Insurance Summit whitepaper, which covers their talks, here.
We’ll be releasing two more whitepapers from the summit over the next few weeks; one covering regulatory changes, and another discussing technology trends in insurance.
The National Commission for the Protection and Defence of Users of Financial Services (CONDUSEF) recently issued the General Provisions for the Registration of Insurance Adhesion Contracts, which regulate the organisation and operation of the Registry of Adhesion Insurance Contracts (RECAS).
‘Adhesion contracts’ are non-negotiable insurance contracts which are offered by insurers and accepted ‘as is’ by insureds seeking the corresponding coverage. Continue Reading