On Saturday 14 March, Spain’s Official State Gazette published Royal Decree 463/2020 declaring the state of alarm for the management of the health crisis situation caused by COVID-19 (RDEA). Under this Royal Decree, Spain has adopted a series of extraordinary measures of great relevance and impact with a threefold objective: i) to protect the health and safety of citizens, ii) to control the spread of the disease, and iii) to strengthen the public health system.
Our Insurance and Reinsurance team in Madrid has analyzed the RDEA, paying special attention to those measures that directly or indirectly impact the Spanish insurance sector: (i) the possibility of keeping “insurance entities” open to the public, (ii) files with the Directorate-General for Insurance and Pension Funds, (iii) ongoing legal proceedings, and (iv) pending legal proceedings.
Our Insurance and Reinsurance team (like all teams in our Madrid office) is 100% operational and available to all our clients to continue providing advice that is necessary in these difficult times. The entire team is teleworking, as a sign of our commitment to the #YomeQuedoenCasa citizen movement. The document with our analysis is available here.
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Our Asia insurance regulatory tracker for the third and fourth quarter of 2019 is attached.
The tracker covers a range of developments across the region, including China’s measures to further open up China’s insurance sector, the guidelines issued by the Hong Kong Insurance Authority in light of the regulatory regime for insurance intermediaries from September 2019, and updated cyber hygiene requirements for insurance brokers in Singapore.
After a dearth of decisions in the early months of the Disclosure Pilot, judges have begun lining up to add to the growing body of commentary on best practice for litigants.
Our overview of PD 51U’s (no-longer-new) rules can be found here.
While various judgments have covered a whole host of disclosure issues (e.g. the importance of the new Disclosure Guidance Hearing regime, the reiteration that Model E disclosure (the-artist-formerly-known-as Peruvian Guano) is truly exceptional), the focus of this article is on three recent High Court decisions which have provided helpful clarification in the following areas:
- Cooperation (McParland v Whitehead  EWHC 298 (Ch) (“McParland“)): parties who adopt an uncooperative approach and/or abuse the Disclosure Pilot process for tactical gain have been warned that they may face immediate adverse costs consequences.
- Confidentiality (SL Claimants v Tesco plc  EWHC 3315 (Ch) (“Tesco“)): given that the foundation of the Disclosure Pilot is the need to adopt a cooperative approach, the courts will – now more than ever – strive to find a delicate balance between ensuring proper disclosure while preserving the confidentiality of commercially sensitive information.
- Control, adverse inferences, and Model C issues; Pipia v BGEO Group  EWHC 402 (Comm) (“Pipia“)): a) re-affirmation of the principle that “control” for the purposes of CPR 31.8/PD 51U includes an “arrangement or understanding” (less than a legally enforceable right) which grants access to the relevant documents, b) an overview of circumstances in which adverse inferences will be drawn from failures to comply with disclosure obligations, and c) helpful commentary on the format and scope of Model C searches.
FCA’s Call for Input on Open Finance
Open Finance refers to the extension of open-banking-like data sharing and third-party access to a wider range of financial sectors and products, including in the insurance market.
The FCA highlighted in its recent market study on general insurance pricing practices (October 2019), that Open Finance and the increasing use of consumer data have the potential to transform how consumers use financial products.
With this in mind and following the development of Open Banking, the FCA has recently published a Call for Input to explore the opportunities and risks arising from Open Finance. See our recent blog for more details.
COVID-19 has already had a significant economic impact, which is likely to increase as Wuhan- and Italy-style lockdowns of large regions are implemented in other areas across the globe. While much has been said about large-scale flexible working, this will clearly not be possible for all businesses, and economic losses caused by disruptions including closure of premises, denial of access, supply-chain failures and utility supply issues are inevitable.
Businesses are likely to have varying levels of insurance in place – which ones are potentially responsive to losses caused by COVID-19 and related containment measures?
2020 looks set to be the “Year of the Insurance Customer” with regulators throughout Europe focusing on the customer experience.
Please join us at our forthcoming webinar as we consider the ways in which regulators across Europe have put the spotlight on customers including fair pricing and the so-called “loyalty penalty”, the treatment of vulnerable customers and those with pre-existing medical conditions, as well as open finance.
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The Hogan Lovells’ Corporate Insurance Newsletter for February 2020 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:
- FCA’s paper on its Sector Views 2020 and the Lloyd’s Market Association’s 2020 priorities
- On Brexit – papers from the UK and EU on negotiation mandates and future relationship
- EIOPA has been busy – it has published papers on the insurance capital standard, the low interest rate environment, final guidelines on cloud service provider outsourcing, cyber underwriting, IBOR transitions and more…
Several high profile systems failures resulting in customers being unable to access their finances and an ever-increasing reliance on outsourcing key activities to group entities or third parties have unsurprisingly caught the regulators’ attention.
The PRA and FCA are consulting on proposed new rules on operational resilience. “Operational resilience” is defined as the ability of firms and the financial sector as a whole to prevent, adapt, respond to, recover and learn from operational disruptions.
The Spanish Insurance and Reinsurance Distribution Act implementing the Directive 2016/97 of the European Parliament and of the Council of 20 January 2016 on Insurance Distribution (the ”IDD”) has been finally approved and published in the Spanish Official Gazette (“Boletín Oficial del Estado” or ”BOE”) on 5 February 2020 and shall come into force on 6 February 2020.
This Act has been finally passed by the Spanish Government (together with other relevant Acts) through a Royal Decree (an urgent process) in order to avoid the imposition of a sanction by the European Union, who had already threatened Spain for its delay in the implementation of the IDD (which should have occurred by October 2018). This delay has been caused by the delay in the formation of a Government in our country.
The objectives of the Spanish Insurance and Reinsurance Distribution Act are (i) to lay down the rules concerning the taking-up and pursuit of the activities of distribution of insurance and reinsurance distribution; (ii) to regulate the conditions in which such distribution activity shall be carried out; and (iii) to establish the applicable supervision regime. The new regulation will set out the requirements that shall be complied with by the insurance and reinsurance distributors to adapt to the IDD concerning product oversight and governance requirements, conflicts of interest and transparency rules. Continue Reading
Some consumers with pre-existing medical conditions (“PEMCs”) have problems navigating the travel insurance market and finding affordable cover given their medical conditions. Some are declined cover, only offered cover that excludes their PEMC or are offered what they consider to be unaffordable premiums. To address this problem, the FCA is introducing new signposting rules and guidance designed to help customers better navigate the travel insurance market and achieve better outcomes.