The pace of change to the global financial sanctions landscape picked up dramatically during the course of 2018. Global (re)insurers, brokers and policyholders now face an increasingly complex lattice of measures imposed by the UN, U.S., EU, UK and other countries. These measures often have different scope, jurisdictional reach and can directly conflict with one another.
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On 13 February 2019, the PRA published Policy Statement (PS) 3/19, which sets out the PRA’s final policy on updating periodic fees and transaction fees for insurers. Notably PS3/19 implements a substantial increase in Part VII FSMA regulatory transaction fees. This change will come into effect on Friday 1 March 2019.
The Part VII transaction fee hike comes at an interesting time, following a period of increased popularity for Part VII transfers which are regarded as a key tool for Brexit restructuring. Part VII transfers allow UK firms to transfer parts of their business to EEA entities to ensure that they continue to benefit from passporting rights after exit day, currently on 29 March 2019. Continue Reading
FCA publishes its Final Report for Wholesale Insurance Broker Market Study
The FCA has published today its final Report in respect of its Market Study of the wholesale insurance broker market.
The Market Study was launched in November 2017 with a focus on evaluating the level of competition in the sector in light of how the sector is developing. For discussion of the FCA’s Terms of Reference for the Market Study and further background, please see the previous blog post on this topic here. Continue Reading
On 19 February 2019, the NAIC Financial Condition (E) Committee voted to form a Restructuring Mechanisms Working Group (the “Restructuring Working Group”) and a Restructuring Mechanisms Subgroup (the “Restructuring Subgroup”) to consider the issue of various insurance business transfer (“IBT”) laws that have been adopted, or are being considered, across the United States. These IBT laws, which generally allow insurers to transfer books or blocks of business to other insurers by operation of law (e.g., following regulatory and court approval), and often without the affirmative consent of impacted policyholders, are similar to “Part VII” transfers authorized under the UK Financial Services and Markets Act 2000.
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On 19 February 2019, the European insurance regulator EIOPA released recommendations for the insurance sector, calling on national supervisory authorities (“NCAs“) in the EU27 to minimise the detriment to insurance policyholders and beneficiaries in case of a no-deal Brexit. Other states in the European Economic Area (“EEA“) can be expected to follow EIOPA’s recommendations. The recommendation follows EIOPA’s call to action for firms to ensure service continuity for cross-border insurance – see our previous blog here.
The recommendations relate to the treatment by insurance regulators in the EU27 of UK insurance undertakings and insurance intermediaries providing cross-border services after Brexit. In particular, EIOPA has sought to allay concerns regarding “contract continuity”, the uncertainty about how UK insurers which have validly underwritten EEA business prior to Brexit, would be able to service that business from 30 March 2019, the point at which the UK will become a third country with no right to “passport” authorisations within Europe. Continue Reading
This post aims to analyze the recent decision issued by the Civil Chamber of the Spanish Supreme Court dated 29 January 2019 and the impact said ruling may have in the cover offered by D&O policies in Spain.
The directors and officers of a company may, as a consequence of their position, be exposed to a claim arising from a management error or negligence, breach of duty, lack of diligence or lack of supervision. This liability is not limited to the civil sphere, but also extends to other areas such as tax liability. Continue Reading
On 5 February 2019, the Prudential Regulation Authority (PRA) published Consultation Paper (CP) 3/19, which proposes to update Supervisory Statement (SS) 18/16 “Solvency II: longevity risk transfers” to simplify the pre-notification requirements for longevity risk transfers and update the key risks the PRA considers arise from longevity risk transfers.
Since Solvency II came into effect the PRA has closely monitored longevity risk transfers to ensure that the transactions are for reasons of genuine risk transfer, as opposed to a means of balance sheet manipulation to reduce the risk margin applying to liabilities which may not benefit from transitional measures. For further information on this topic see our earlier blog post here. Continue Reading
The Hogan Lovells’ Corporate Insurance Newsletter for January has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- Latest Brexit related consultation papers and other material from the HM Treasury, PRA and FCA
- FCA consultation on proposals to improve shareholder engagement
- Launch of new online portal for mutual societies
- EIOPA publishes its call for evidence on integration of sustainable risks.
On 23 January 2019, the Financial Conduct Authority (FCA) published a consultation paper (CP19/4) on optimising the Senior Managers and Certification Regime (SMCR). This paper consults on a range of proposed amendments and clarifications to the regime. In particular, the FCA has proposed excluding the Head of Legal from the requirement to be approved as a Senior Manager under the Senior Managers Regime. The FCA has also made changes to the scope of the certification regime: it plans to narrow the client-dealing function and introduce a new “systems and controls” certification function for certain firms. Continue Reading
The FCA has confirmed that the Senior Managers & Certification Regime (SMCR) will cover all regulated financial firms (including any insurance intermediaries in insurance groups) from 9 December 2019. The new regime will impact nearly all staff within financial services organisations, and firms need to consider how they should be preparing for the change ahead.
Please join specialists from our financial services, regulatory investigations and enforcement and employment teams for a webinar looking at the impact of the requirements on the insurance industry and how firms can best prepare for this change.
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