UK: Corporate Insurance Newsletter - June 2012

Welcome to this update from Clyde & Co's Corporate Insurance Team summarises new developments as reported by the FSA, Lloyd's of London, BIBA and other sources, with links to the full documents where these are available.

Regulatory

FSA Q&A Solvency II

On 23 April 2012, the FSA published a new webpage that brings together the most up-to-date questions and answers (Q&As) from its Solvency II programme. More

Changes to the Conduct of Business Sourcebook

Article, by Andy Tromans and Samantha Jones of Clyde & Co, explores the FSA's final rules on "protecting with-profits policyholders", which was published on March 7, almost a year after it published its controversial consultation paper on the subject. The article highlights the sense of back-paddling within the policy statement, particularly in relation to mutual insurers, observing that the FSA may not now have the appetite to impose a very broad definition of policyholder interests on with-profits mutuals. More

Result of ECJ gender ruling is confusion.com

Written by Geraldine Quirk. With less than 12 months to go before the ECJ ruling on gender discrimination comes into effect, there is still a considerable amount of confusion and uncertainty in the market regarding how insurance companies should respond. At a recent seminar hosted at our offices in London, we set out to explore the background to the ruling, analyse the legislation and consider how you should best assess the risks that it presents. More

What does the European Court ruling on gender (Test Achats) mean for me?

The ABI has put together a useful guide in relation to the Test Achats ruling. The European Court has ruled that insurers can no longer consider whether you are a man or a woman when pricing insurance policies from 21 December 2012. The main policies to be affected are those which use gender as a factor in pricing for risk: motor insurance, annuities and life insurance. More

Solvency II and the road to 2014: The impact on insurers and reinsurers

Written by Jon Turnbull and Geraldine Quick for The International Comparative Legal Guide to: Insurance & Reinsurance. The Solvency II Directive (2009/138/EC) provides the framework for a comprehensive overhaul of the existing system of regulation, covering authorisation; corporate governance; supervisory reporting and public disclosure; risk assessment and management; and solvency and reserving.

This article appeared in the 2012 edition of The International Comparative Legal Guide to: Insurance & Reinsurance 2012; published by Global Legal Group Ltd, London. More

FSCS confirms £36m annual levy for general insurance intermediation

The Financial Services Compensation Scheme (FSCS) has confirmed its proposed levy for 2012/13 at £265m. The levy has increased by £44m since FSCS published its initial assumptions in the Plan and Budget 2012/13 in February. It follows an up-to-date analysis of claims paid in the previous year and claims assumptions for 2012/13. More

Solvency II and the London Market

Julian Adams, Director of the Insurance Division at the Financial Services Authority (FSA) delivered a keynote address on the 15th May at the Insurance Day Summit on the journey towards the implementation of Solvency II and he also gave some specific feedback on some of the issues the FSA have seen. According to Adams some firms have not considered the extent to which certain issues may or may not be material to their overall position, and then applied an appropriate degree of rigour, there are similar issues with model scope and also aggregation and dependency assumptions. Additionally the FSA has made a number of separate observations in the area of validation and validation policies. The first and overarching point is that some of the validation policies have been so vague that they have not been able to draw any assurance from them.More

European Commission issues Solvency II timeline

The European Commission has reiterated that they very much support the entry into force of Solvency II from 1 January 2014 and will make every effort to secure this. As at May 2012, EIOPA expects to have the legal powers to consult on standards and guidelines from late Autumn 2012. More

Europe

Eurozone crisis and the possible impact on insurers

Article by Nigel Brook of Clyde & Co. The recent loan bailout of Greece appears to have averted, at least for now, the prospect of one or more eurozone countries leaving the euro. However insurers can usefully consider the implications of this happening at some stage, because many of these can be addressed in advance. This could have implications for the insurer's assets including sovereign debt but this piece focuses on insurance policies. More

Sanctions

Breaching sanctions: the consequences

The extensive utilisation of sanctions as a foreign policy tool is a comparatively recent development in the European Union. As such, there are limited examples of enforcement actions taken against those who breach sanctions, whether deliberately or accidentally.

This is in contrast to the United States, where there is a history of enforcement actions going back many years, with significant fines being imposed on violators responsible for multiple breaches. However, evidence suggests that the UK Government is now taking enforcement more seriously.

Please click here to view our Sanctions Update on this issue.

If you have any questions, please do not hesitate to get in touch with any of the key contacts listed on our sanctions microsite or your usual contact.

Corporate

HMRC makes changes to the stock transfer form

A new certificate has been added to the reverse of the stock transfer form, to be completed when a share transfer is 'otherwise' exempt from stamp duty or no chargeable consideration is given for the transfer. HM Revenue & Customs (HMRC) guidance has been updated to provide advice on completing this new certificate.The new form will be available from suppliers from 6 April 2012. HMRC recommends use of the new form on and from that date but confirms that it will accept old versions of the stock transfer form until 5 September 2012. More

News in brief from the industry

Private motor insurance market under scrutiny. The Office of Fair Trading (OFT) have provisionally referred the private motor insurance market to the Competition Commission. It claims it has found evidence that insurers are competing in a 'dysfunctional' way

BIBA has created new guidance on the Bribery Act for its members available on its website

The ABI has updated news stories on the crime of metal theft, the compensation culture and the high cost of motor insurance

The MIB highlights uninsured drivers in its April update

The FSA has fined Habib Bank AG Zurich for anti-money laundering failings

Insurance Fraud Bureau launches insurance fraud register

Cases

Sulamerica CIA v Enesa: Governing law and scope of arbitration agreement/whether a binding obligation to mediate first

http://www.bailii.org/ew/cases/EWCA/Civ/2012/638.html

Clyde & Co (Peter Hirst and Richard Butt) for respondents, White & Case for appellants. This case highlights that the courts will strive to ascertain the intention of the parties where clauses in a policy potentially conflict with each other or are uncertain. In the case of mediation, it again stresses the importance of setting out a clear mediation process in order to ensure that the mediation clause in a contract will be enforceable.

Yeates v Aviva Insurance: Application for extension of time to appeal/insurers' argument that claim is fraudulent

http://www.bailii.org/ew/cases/EWCA/Civ/2012/634.html.

Although the Court of Appeal did not need to further consider the underlying appeal, it is worth recalling that in the recent case of Aviva Insurance v Brown an (eventually aborted) attempt to claim approximately £6,500 per month for accommodation costs in relation to a property which the insured in fact owned as part of a genuine total claim of over £230,000 (ie under 3% of the claim, per month) was not viewed as "immaterial" either.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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