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.
Click here to read more and register for the Webinar.
On 18 December 2018 the UK and the U.S. signed an agreement on the prudential supervision of insurance and reinsurance companies. Shortly thereafter, on 25 January 2019, HM Treasury announced that it had signed an agreement with Switzerland on direct insurance. These agreements form part of the UK Government’s Brexit preparations: after the UK leaves the EU, it will no longer be bound by agreements made by the EU with the U.S. and with Switzerland. Continue Reading
Our tax team recently published an article about the introduction of a new Profits Division Compliance Facility by HM Revenue & Customs. This is an opportunity for multinationals, including insurers, active in the UK to initiate a discussion with HMRC on how they allocate their profits across jurisdictions for tax purposes. It is particularly relevant to insurers that book significant profits in low tax jurisdictions. Click here to read the article.
On 11 January 2019, the High Court handed down its judgment in Various Claimants v Giambrone & Law (A Firm) & Others, AIG (Europe) Limited  EWHC 34 (QB)), finding that AIG is liable for claimants’ costs pursuant to a non-party costs order under section 51 of the Senior Courts Act 1981.
Giambrone concerns a group action against the law firm Giambrone & Law. Advised by Giambrone, hundreds of claimants paid deposits for luxury off-plan apartments in Italy. The development site was subsequently seized by the Italian authorities as part of an investigation into money laundering by the IRA and Italian Mafia.
In July 2017, the Court of Appeal found that Giambrone was in breach of contract and trust by handing over deposits to developers and failing to warn claimants of the risk of organised crime. The claimants were awarded the value of their lost deposits as compensation. When Giambrone failed to pay, the claimants filed a third party costs order against its insurer, AIG.
AIG had asserted that it was entitled to aggregate all claims by aggrieved buyers within a £3 million indemnity limit (that was all but exhausted by prior settlements), which Giambrone disputed. To settle this dispute, AIG and the partners of Giambrone entered into an agreement settling on a limited form of aggregation and requiring AIG to continue advancing defence costs (the “Agreement“). Crucially, AIG could withdraw funding in the event that it determined there was no reasonable prospect of defending the claim. Continue Reading
On 8 January 2019 the FCA published a consultation paper, CP19/2, which sets out details of the financial services contracts regime (FSCR) and the rules the FCA proposes should apply to firms during the regime. The consultation closes on 29 January 2019.
The legislative bones of the regime are set out in the draft Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019. A draft of this regulation has been laid before Parliament for approval.
The FSCR will allow EEA firms to continue to service pre-existing UK contracts entered into before exit day or before exiting the temporary permissions regime (TPR) for a limited period, provided they meet the conditions of the FSCR. Further details about the conditions of the regime can be found in Chapter 2 of the consultation paper.
Unlike the TPR, the FSCR will not allow these firms to undertake new business in the UK post-exit day. Click here to read the full article.
The FCA published its finalised guidance on the fairness of variation terms in financial services consumer contracts under the Consumer Rights Act 2015 on 19 December 2018. While there weren’t many substantial changes from the FCA’s draft guidance, a number of helpful clarifications were made. Importantly, the FCA has emphasised that the responsibility for ensuring that consumer contracts are fair lies with senior managers. Firms will want to review their variation clauses in the light of the final guidance to ensure they reflect best practice. Click here to read the full piece.