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HM Treasury has proposed amendments to the Financial Services and Markets
Act 2000 that effect aspects of the transfer of insurance business.
The consultation period, during which time comments on the proposals
were invited from all stakeholders, ended on 26 January 2007.
On the basis that significant costs are involved in such transfers,
and the risk that uncertainty may deter such transactions as a result,
HM Treasury propose clarificatory amendments to:-
1 Put beyond all doubt that accompanying reinsurance and other contracts,
relating to the main business being transferred, may be transferred
as part of the insurance business transfer scheme; and
2 Put beyond all doubt that this provision extends to the power of the
Court to override certain contractual provisions that purport to modify
or annul a contract upon it being transferred, or upon a step being
taken towards a transfer.
HM Treasury also proposes to require that applicants for an insurance
business transfer scheme, which will include the transfer of reinsurance
contracts, notify the reinsurers in question. This requirement will,
as with other notification provisions under Part VII, be subject to
waiver by the Court, if it deems it appropriate in the circumstances
of a particular application.
Finally, HM Treasury also proposes to remove the restriction on the
ability of former underwriting members of the Lloyd's market to transfer
their insurance business. This will affect all former underwriting members
whose resignation took effect on or before 23 December 1996.
The outcome of the consultation and the eventual form of any amendments
is awaited.
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