Cyber incidents have the capacity to cause many different types of loss. Insurance coverage exists for at least some aspects of cyber risks in the UK market. However, given the range and diversity of risks that may arise, there are some key issues for businesses to consider when it comes to insurance against cyber risks in commercial contracts. Click here to read an article on these issues by Sarah McNally and Andrew Moir that was first published in the December 2017 issue of PLC magazine.
In Crowden and Crowden v QBE Insurance (Europe) Ltd  EWHC 2597 (Comm) the Commercial Court found in favour of the Defendant insurer on the disputed construction of an “insolvency” exclusion in a professional indemnity insurance policy. The case is a useful reminder of the approach which the English Courts take to the construction of exclusions in insurance contracts. Continue reading
This article was first published on Thomson Reuters Regulatory Intelligence.
The PRA has published the first of three consultation papers (CP21/17) on reforming the Solvency II regime.
The consultation reflects PRA experience of working with Solvency II since its introduction in January 2016, while covering some of the improvements proposed by the ABI and discussed earlier this year with the House of Commons Treasury Committee.
This first consultation paper contains some new guidance from the PRA on firms’ use of the matching adjustment. It also consolidates earlier guidance, allowing firms to comment on the PRA’s approach for the first time. The PRA’s aim is not to change its existing guidance but to improve a firm’s chance of making a successful MA application. Continue reading
The UK Senior Managers and Certification Regime (SMCR) is being extended to all financial services firms during 2018. PRA and FCA proposals applying to insurers build on the Senior Insurance Managers Regime (SIMR) although the transition to the SMCR is complicated by overlapping Solvency II requirements.
Our experience of working with clients on the SMCR and the SIMR suggests that implementation projects should begin now rather than waiting for the outcome of the consultations.
On 14 September 2017, the UK Parliament published a letter from Nicky Morgan, Chair of the Treasury Committee, to Philip Hammond, Chancellor of the Exchequer, on insurers’ ability, post-Brexit, to service insurance contracts sold under passporting arrangements with a duration that extends beyond 29 March 2019.
The European Union (Withdrawal) Bill was published by the Government in July 2017 and is the key piece of UK domestic legislation that will implement Brexit.
Repeal of the European Communities Act:
The principal purpose of the Bill is to repeal the European Communities Act 1972, which gives effect and priority to EU law in the UK, thereby formally reasserting the sovereignty and independence of domestic law. The Government had published a White Paper in March 2017, Legislating for the United Kingdom’s withdrawal from the European Union (the “White Paper“) proposing a “Great Repeal Bill”. The now less dramatically titled European Union (Withdrawal) Bill (the “Withdrawal Bill“) is the vehicle for that legislation. The Government has also published detailed draft explanatory notes for the Bill (“Explanatory Notes“).
The FCA has published proposals to extend the Senior Managers and Certification Regime (SMCR), which already applies to banks, to other financial services firms. The new rules, which are designed to make individuals more accountable for their actions, will affect insurance intermediaries and their employees.
We have prepared:
- a two page “at a glance” guide (click here) to the FCA’s proposals; and
- a more detailed briefing (click here) which considers the implications for insurance intermediaries and their employees of the FCA’s proposals.
Recent comments made by Sam Woods, CEO of the PRA, about the PRA’s approach to supervision are worrying. A speech prepared for this year’s Building Societies Annual Conference (but not actually delivered) is relevant to all authorised firms, not just building societies. Parts of the speech, which relate to Solvency II rules on contract boundaries, are specifically directed at insurers.
- The PRA argues that is not enough for firms to meet the requirements of the regulatory regime; they must also comply with the “spirit” of the rules.
- The PRA will form its own judgement about what this means for firms, despite the UK’s obligations under EU law.
- Mr Woods’ failure to acknowledge EU constraints on the content of the applicable rules, and therefore the PRA’s use of its supervisory powers, appears to confirm that the PRA is willing to “gold-plate” EU legislation despite saying on many occasions that it would not.
FCA Guidance Consultation paper GC17/5 “Proposed guidance on the FCA’s approach to the review of Part VII insurance business transfers”
In May 2017, the FCA published a guidance consultation paper (GC17/5) entitled “Proposed guidance on the FCA’s approach to the review of Part VII insurance business transfers”. The draft guidance in this document sets out the FCA’s approach to reviewing insurance business transfer schemes under Part VII of the Financial Services and Markets Act 2000 (FSMA) (Part VII Transfers). Continue reading