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International Insurance and Reinsurance News, Trends, and Cases

Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – January 2020

The Hogan Lovells’ Corporate Insurance Newsletter for January 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:

  • Reintroduction of the Financial Services Duty of Care Bill to Parliament
  • Papers on the future of the UK – EU relationship for financial services
  • The European Commission speech on the Solvency II Review
Posted in Case reports, UK

“Of Ransoms, Bitcoin, and Injunctions”: English High Court grants subrogee insurer proprietary injunction over ransomed Bitcoin

In a gripping tale sure to excite die-hard Potter fans everywhere, the English High Court has granted a so-called ‘Harry Potter injunction‘ (i.e. a protective injunction against persons unknown[1]) restraining the dissipation of Bitcoin from a specified Bitcoin exchange.

Aside from tenuous/clickbait-worthy links to children’s literature, the case is of interest for two main reasons:

  1. Bitcoin as property?: this case reinforces the growing trend for the English courts to treat crypto-currency as property.
  2. Remedies available to ransom victims (and their insurers): cyber-ransom is a very modern phenomenon, and this judgment demonstrates the growing arsenal of remedies available to victims/their insurers.

The judgment of Bryan J can be found here[2].

Factual background/context

This application for interim injunctive relief arose out of an October 2019 malware attack on a Canadian insurance company (the “Insured“) during which the hackers (i.e. the first and second defendants: persons unknown) locked the Insured out of its own computer systems, and demanded a ransom of USD $950,000 (payable in Bitcoin).

That ransom was eventually paid – via a (legitimate) intermediary which “specialises in the provision of negotiation services in relation to crypto currency ransom payments” (para.3).

Luckily for the Insured, it had taken out a cyber-crime policy with an English insurer (the “Insurer“) and so it was the Insurer which ended up funding the ransom payment. As a result, the Insurer became entitled to assert rights of subrogation and step into the shoes of the Insured to bring this application for proprietary injunctive relief.

After conducting an investigation via yet another specialist firm (“a provider of software to track payment of crypto currency“[3]), the Insurer eventually tracked the payment to a Bitcoin exchange controlled by the third and fourth defendants (the “Exchange“).

The relief sought

The Insurer’s claims in the main action were treated as being confined to restitution and/or to affix all four defendants as constructive trustees[4], i.e. proprietary remedies.

In support of those main proprietary remedies, the Insurer applied for (and was granted) 1. a proprietary injunction against all four defendants, and 2. ancillary relief “in terms of providing information so that location of assets etc…can be obtained” (para.66).

Bitcoin as property?

A pre-requisite to being granted a proprietary injunction (i.e. restraining the defendant/respondent from dissipating assets), is that the subject matter of the injunction is considered to be “property” as a matter of law (see para. 55).

The proprietary (or otherwise) status of crypto-currency has been a matter of some debate in recent years. The original conceptual difficulty with treating crypto-currency as true “property” is that “English law traditionally views property as being of only two kinds, choses in possession and choses in action” (para.55):

  1. Choses in possession: since crypto-currency is virtual, it cannot be possessed.
  2. Choses in action (i.e. a legal right/claim): similarly, “Bitcoin are not choses in action because they do not embody any right capable of being enforced by action.”

However, the above formulation is derived from appellate authority which is almost 150 years old (1885)[5]; the Victorian Court of Appeal can be forgiven for having failed to foresee how the advent of crypto-currency would not fall neatly into their restrictive formulation.

Helpfully, UK jurists have not been idle and the trend of legal commentary has been to interpret the law as having moved on. Indeed, in November 2019 the UK Jurisdiction Taskforce (“UKJT“) issued a “Legal Statement on Cryptoassets and Smart Contracts“[6] which concluded that – in principle – crypo-currency can be treated as property.

In this case, Bryan J lent emphatic judicial endorsement to this view, holding that “Essentially, and for the reasons identified in that legal statement, I consider that a crypto asset such as Bitcoin are property” (para.59).

Bryan J’s holding adds to the growing weight of (albeit first instance) authority where crypto-currency has been deemed to be property[7].

HL Commentary: the key take-away points[8]

1. Bitcoin/crypto-currency as property

It is clear that the judicial trend is to deem crypto-currency to be property. Given the widely publicised UKJT commentary and the line of High Court judgments which now endorse that view, it is unlikely that any first instance judge will feel inclined to swim against that judicial tide.

But why does all this matter? It is often claimed (inaccurately) that ‘possession is nine-tenths the law‘. In fact, when you dig a little deeper, it becomes clear that in a multitude of legal contexts – e.g. insolvency, the interpretation of various statutes, the law of trusts and restitution – property is most definitely king. To quote the UKJT:

It matters because in principle proprietary rights are recognised against the whole world, whereas other—personal—rights are recognised only against someone who has assumed a relevant legal duty.”

2. Remedies and insurance

Insureds: the lesson here for companies worried about their cyber-crime exposure is to take out comprehensive insurance.

Insurers: the comfort offered by this judgment to insurers exercising rights of subrogation is that cyber-crime loss payments are not necessarily sunk costs, lost forever to the dark web. While the apparent attraction of crypto-currency to cyber-criminals has been the perception of the lack of traceability and accountability, this case demonstrates the flexibility of the English courts in providing creative solutions to remedy 21st century problems which Victorian jurisprudence could not have been expected to envisage.

Hogan Lovells International LLP – Mbombo Simpungwe-Kaoma



[1]               Popularised in the early noughties with a series of injunctions sought by Bloomsbury, the publishers of the Harry Potter series, against “John Does”/persons unknown who might obtain pre-publication copies unlawfully.
[2]               Paragraph references are to the judgment. AA v (1) Persons Unknown Who Demanded Bitcoin on 10th and 11th October 2019, (2) Persons Unknown Who Own/Control Specified Bitcoin, (3) iFINEX trading as BITFINEX, (4) BFXWW INC trading as BITFINEX [2019] EWHC 3556 (Comm).
[3]               Paragraph 13. Thus indicating that there is apparently a burgeoning legitimate quasi-law enforcement industry growing out of the epidemic of cyber-crime.
[4]               There were various other alternative causes of action, but for the purposes of this application – in order to circumvent certain jurisdictional issues – the Insurer’s claims were treated as being limited to these: see para. 52.
[5]               Colonial Bank v Whinney [1885] 30 Ch.D 261.
[6]               See the Hogan Lovells commentary here.
[7]               See Vorotyntseva v Money-4 Limited [2018] EWHC 2598 (Ch), and Liam David Robertson v Persons Unknown (unreported 15th July 2019).
[8]               This case also provides helpful commentary – beyond the scope of this article – on a) the CPR 39 circumstances in which it will be appropriate, as here, for a hearing to take place in private (para.s 16-33), b) the circumstances in which it is appropriate to issue an application without notice to some defendants/respondents but not others (para.s 34-35), and c) on the CPR PD 6B jurisdictional gateway difficulties posed by seeking Banker’s Trust, Norwich Pharmacal, and freezing orders/injunctions against foreign domiciled entities (para.s 38-49).

Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – December 2019

The Hogan Lovells’ Corporate Insurance Newsletter for December 2019 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:

  • The PRA and FPC joint discussion paper on financial implications on climate change
  • PRA papers on outsourcing and third party risk management and on operational resilience
Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – November 2019

The Hogan Lovells’ Corporate Insurance Newsletter for November 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  papers and other material from the  PRA and EIOPA
  • IAIS material on ComFrame and the Insurance Capital Standard, recovery planning and liquidity risk management
  • PRA statement on changes which will impact the calculation of the SCR
  • FCA guidance on the general insurance distribution chain
Posted in Regulatory and legislative updates, UK

UK: FCA Release Finalised Guidance on General Insurance Distribution Chain (FG19/5)

This week the FCA has published detailed finalised guidance setting out their expectations of insurance product manufacturers and distributors in relation to product value and distribution arrangements in general insurance.

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Posted in Regulatory and legislative updates, UK

Vulnerable customers and financial services: what does the future hold?

The fair treatment of vulnerable customers is a key priority for the FCA. It is an important topic not least because the FCA considers that half of UK adults (25.6 million people) display one or more characteristics of potential vulnerability.

The FCA’s definition of a vulnerable customer is intentionally broad and captures anyone who “due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care“.

Vulnerability for these purposes can be both ‘actual’ and ‘potential’ and is dependent, to some degree at least, on the nature of a customer’s treatment by firms and the level of complexity of the products or services that a customer is engaging with as well as the customer’s personal circumstances.

It is clear that “vulnerability” is not a static state of affairs; instead, customers may move in and out of “vulnerability” as circumstances dictate. Vulnerable (or potentially vulnerable) customers are therefore likely to comprise a significant proportion of a firm’s customer base at any given time.

A number of current FCA initiatives are designed – in varying degrees – to address the issue of fair treatment of vulnerable customers in the financial services sector.

With this in mind, what (additional) protections for vulnerable customers is the FCA contemplating and what can financial services firms expect in this area?

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Posted in Market developments, UK

Pool Re launches Pool Re Solutions – a shift in the insurance industry’s relationship with terrorism risk?

Pool Reinsurance Company Limited has launched Pool Re Solutions, a new in-house centre of excellence for understanding, modelling and managing the threat of terrorism. The new unit is aimed at helping the reinsurer support its members in a bid to address market failures that exist in capacity, demand and information gaps. It is hoped that Solutions will represent a “turning point” in the insurance industry’s relationship with terrorism risk, lead to more policies being purchased, and strengthen the resilience of the economy to acts of terrorism.

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Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – October 2019

The Hogan Lovells’ Corporate Insurance Newsletter for October 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  papers and other material from the HM Treasury, PRA, FCA and EIOPA
  • FCA’s papers on climate change and green finance and general insurance pricing practices
  • The future of financial services regulation in the UK
  • The Solvency II 2020 review.
Posted in UK

Hogan Lovells Blockchain Summit – 5 November 2019

Hogan Lovells is proud to host our Blockchain Summit on “The Impact of Digital Assets on Financial Institutions” at our offices in London. Join us for a series of in-depth panels and presentations on regulatory and compliance issues from industry leaders and legal compliance specialists.

Agenda highlights:


  • Lawrence Wintermeyer, Co-Chair, Global Digital Finance


Blockchain regulation around the world

This panel will feature a range of regulators from across Europe who will discuss their views on blockchain and how they have addressed it in their jurisdiction. We will look to discuss how the regulators have arrived at this position and the challenges that they see going forward.

Blockchain policy around the world

This is a forward-looking panel where we ask policy makers from across Europe to discuss how they think how blockchain policy will develop over the next few years. A number of jurisdictions are moving out of the wait and see phase and into implementing policy recommendations phase and we will gain an insight into what this is.

Blockchain and capital markets

This session on the blockchain and capital market panel will focus on the benefits and impact it will have on the value chain. We want to also look at some of the hurdles that need to be overcome from a technological, regulatory and industry perspective.

Blockchain and payments and Libra

This session will look at how blockchain has been used in the payments sector. We will look at where blockchain has been utilised to good effect and what have been the drivers behind this. We will also discuss the growing prominence of stablecoins and some of the concerns that stablecoins such as Libra will have to address.

Blockchain and sustainable development

This session will see how blockchain has been used to improve the efficiency of the UN SDG implementation and the delivery of humanitarian aid. This panel will not only look at examples of use cases but also look at why blockchain has been used and what needs to be done to further this agenda.

Blockchain and insurance

This session will look to see how blockchain is being used in the insurance sector. The panel will look at how blockchain has been used to a positive effect in the industry and how the distributed ledger has helped eliminate common causes of fraud as well as simplifying the flow of information. Continue Reading

Posted in Regulatory and legislative updates, UK

UK: FCA Market Study into General Insurance Pricing Practices: time to look at pricing strategies?

On 4 October 2019, the FCA published its much anticipated Interim Report on its Market Study into general insurance pricing practices (the “Interim Report“).

The Market Study stems from the work of the FCA in its Thematic Review into pricing practices in the retail insurance sector which concluded that further action was necessary due to concerns that general insurance pricing practices have the potential to cause harm to consumers, particularly those that are vulnerable. The FCA has also taken account of the CMA’s response to the super-compliant made by the Citizens Advice Bureau concerning loyalty pricing practices.

The focus of the Market Study is pricing practices in home and motor insurance, looking specifically at three key areas:

  • the harm from pricing practices and what drives this;
  • the fairness of pricing practices; and
  • the impact of pricing practices on competition.

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