FSA - Solvency II
The FSA has updated its Solvency II webpage to announce that it is now working towards the amended transposition date of 30 June 2013, and implementation by firms from 1 January 2014.
Solvency II Implementation – Hurry up and wait
A sense of frustration over the anticipated implementation of Solvency II has been growing within the UK insurance market. Having spent considerable amounts of time and money preparing for the new regime, the insurance industry can easily be forgiven for this, not least due to the uncertainty regarding the key questions around exactly when and how the implementation will happen. Written by Andy Tromans and Heidi Durnford for Insurance Day.
FSA consults on Solvency II
The Financial Services Authority has issued its second consultation paper CP12/13 on the transposition of the Solvency II Directive. The consultation paper addresses feedback received by the FSA from its previous consultation CP11/22 and proposes new guidance and rules relevant to the Lloyd's insurance market and the policy regarding the separate disclosure of capital add-ons and undertaking specific parameters (USPs); and proposes changes to existing Handbook rules governing with-profits and unit-linked business.
FSA answers questions on transition to the FCA
On 31 July 2012, the FSA published a set of questions and answers on the transition to the new Financial Conduct Authority (FCA). Announcements made by the FSA in the Q&As include:
- There will be a six-month transition period following confirmation of the new disclosure wording concerning firms' regulatory status.
- There will be no need for firms to reapply for authorisation under the new regulatory regime.
- There will be very little change to existing financial crime oversight as a consequence of the transition to the FCA.
- The FCA will adopt the FSA's approach to allocating fees and the principles for determining them. The FSA does not expect there to be significant changes after the transition to the FCA.
- The FCA will retain the FSA's existing systems for online notifications and applications (ONA) and for online regulatory reporting (GABRIEL).
The FSA intends to provide answers to many of the questions included in the Q&As in an FCA approach document to be published in October 2012. This document will follow on from a previous approach document published in June 2011.
Macro-prudential policy in deflationary times
The FSA has published a speech given by Lord Turner, Chairman of the FSA, during the Financial Policy Committee ("FPC") regional visit to Manchester. In his speech, Turner sets out the key reasons for the financial crisis and how the financial services industry has since been attempting to rectify its errors, particularly as regards structural reform and the introduction of the FPC. He also sets out the challenges that he believes the FPC faces in the future and how it would deal with deflationary risk differently in light of its new policies.
Amendments to Money Laundering Regulations 2007 to come into force on 1 October 2012
On 17 July 2012, HM Treasury published the government's response to its June 2011 consultation on proposed changes to the Money Laundering Regulations 2007 ( SI 2007/2157) (MLRs), together with an impact assessment. The government is taking forward proposals to reduce the regulatory burden imposed by the MLRs, while strengthening the overall anti-money laundering regime. The aim of the changes is to make the UK's AML regime more effective and proportionate.
UK Law Commission consultation
The UK Law Commission has opened an Issues Paper looking at unfair terms in contracts between businesses and consumers. The Issues Paper covers two main areas:
- The price and main subject matter exemption under the UTCCR
- Review of the recommendations in our 2005 Report on Unfair Terms
The consultation closes 25th October 2012.
IUA develops clause database
The International Underwriting Association (IUA) has launched a new insurance and reinsurance clauses database. It has been grouped into three main classes of business aviation, marine and property/casualty.
The impact on future loss calculations for UK personal injury claims
The calculation of personal injury awards is under the spotlight following news of the Lord Chancellor's proposed consultation on the discount rate applied to such awards. In the UK, lump sum damages for future losses in severe injury claims, including loss of earnings and future care costs, are calculated by applying "multipliers" to the annual loss or cost. Written by James Dadge and Peter Walmsley for Insurance Day - reproduced with the kind permission of Informa.
To help you keep up to date with the latest sanctions developments that may affect your business we have developed a dedicated Sanctions Microsite where you will find all our sanctions articles and events and useful information relating to Iran, Libya, North Korea, Syria, Cuba and Burma/Myanmar.
Corporate Manslaughter – Are Directors The Bait?
An article by Chris Morrison, Rod Hunt and Richard Ollier regarding Lion Steel Equipment Limited ("Lion Steel") who became the third company to be sentenced for the new offence of corporate manslaughter when it was fined £480,000 plus Prosecution costs of £84,000.
Global news in brief from the industry
- Lloyd's Market Association (LMA) has appointed Canopius Managing Agents Ltd's head of operations and claims Mike East as the new chair of its claims committee with immediate effect. He will replace Jeremy Pinchin, who has chaired the committee since May 2009 and is taking up the role of Hiscox Bermuda chief executive and group claims director.
- Nomura has estimated that the final cost of the LIBOR scandal to banks will be anywhere from "a few billion to hundreds of billions." Analysts predict that LIBOR manipulation could in fact cost near the higher end of Nomura's estimate, from those seeking compensation.
- Amanda Blanc, ACII, CEO, Axa Insurance Commercial Lines and Personal Intermediary, and a Chartered insurer, has been elected as the Chartered Insurance Institute's 116th president at its annual general meeting held in London.
- ABI - Industry publishes claims data and calls for urgent reform to The Riot (Damages) Act 1886. The insurance industry has published riot claims data and calls on the Government to reform The Riot Damages Act (1886).
Faraday Reinsurance v Howden North America & Anor
Whether trial judge precluded from deciding applicable law in an insurance dispute
Insurers had commenced proceedings against their American insured seeking a declaration that the policy was governed by English law and subject to the jurisdiction of the English courts. The judge granted this declaration. In so doing, he rejected an argument that the English proceedings were not justified and did not serve a useful purpose and the insured appealed against that part of his judgment.
The Court of Appeal has now rejected that appeal. In the case of New Hampshire v Phillips Electronic , Phillips LJ advised that the correct approach is that an appeal in relation to the exercise of discretion on a question of jurisdiction should not be allowed unless the judge has made an error "which risks having adverse consequences on the trial of the action that significantly outweigh the prejudice which will inevitably be caused to the proceedings by the appeal process". The Court of Appeal found that the trial judge here had made no error at all. (As a side issue, Longmore LJ added that where permission to appeal is sought on a jurisdictional issue in an international insurance dispute, any applicant for permission to appeal should draw these remarks of Phillips LJ to the specific attention of the court and say why, in the particular circumstances of the case, they do not furnish good reason for refusing permission to appeal).
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.