Insurance Companies Regulations 1994

Publication Date:January 01, 1994
 
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1994No. 1516

INSURANCE

The Insurance Companies Regulations 1994

7thJune1994

8thJune1994

1stJuly1994

ARRANGEMENT OF REGULATIONS

Part I

Preliminary

1. Citation and commencement.

2. Interpretation: general.

Part II

Authorisation etc.

3. Benefits in kind.

4. Authorisation: submission of information.

5. Main agents: exceptions.

6. Authorisation: UK assets of applicants from non-EEA States etc.

Part III

Deposits

7. Interpretation: Part III.

8. Making and amount of deposit.

9. Direction etc. by the Secretary of State.

10. Permitted securities.

11. Investment.

12. Disposal of surplus.

13. Cessation of business etc.

14. Effect of direction etc.

15. Application of rules under s.38(7) of the Administration of Justice Act 1982.

Part IV

Margins of Solvency

16. Interpretation: Part IV.

17. Margins of solvency: determination.

18. Long term classes I, II and IX.

19. Long term classes III, VII and VIII.

20. Long term classes IV and VI.

21. Long term class V.

22. Guarantee fund and minimum guarantee fund.

23. Valuation.

24. Implicit items: future profits.

25. Implicit items: zillmerising.

26. Implicit items: hidden reserves.

Part V

Currency Matching, Localisation

27. Matching: general requirement.

28. Matching: property linked benefits.

29. Matching: currency of general business liabilities.

30. Matching: exception for certain liabilities.

31. Localisation.

32. Exclusions from regulations 27 to 31.

33. Margin of solvency of non EC company with head office not in an EFTA State etc.: location of assets.

Part VI

Change of Control

34. Particulars of changes of director, controller or manager, etc.

Part VII

Conduct of Business

35. Contents of advertisements: overseas insurers.

36. Contents of advertisements: statement of capital.

37. Interpretation of and provisions supplemental to regulations 35 and 36.

38. Intermediaries: connected persons.

39. Invitation by intermediary.

40. Cases excepted from regulation 39.

41. Notice of long term contract.

42. Exemptions from regulation 41.

43. Linked contracts.

Part VIII

Valuation of Assets

44. Interpretation: Part VIII.

45. Application: Part VIII.

46. Shares in and debts due or to become due from dependants.

47. Valuation of assets and liabilities of dependants for the purposes of regulation 46.

48. Debts and other rights.

49. Land.

50. Equipment.

51. Unlisted securities.

52. Unit trusts.

53. Listed investments.

54. Reversionary interests etc.

55. Derivative contracts.

56. Other assets.

57. Assets to be taken into account only to a specified extent.

Part IX

Determination of Liabilities

58. Interpretation: Part IX.

59. Application: Part IX.

60. Long term and general business.

61. Provision for adverse changes.

62. General business liabilities.

63. Relevant co insurance operations: general business.

64. Long term liabilities.

65. Method of calculation.

66. Avoidance of future valuation strain.

67. Valuation of future premiums.

68. Acquisition expenses.

69. Rates of interest.

70. Rates of mortality and disability.

71. Expenses.

72. Options.

73. Contracts not to be treated as assets.

74. No credit for profits from voluntary discontinuance.

75. Nature and term of assets.

Part X

Credit Insurance Business

76. Credit insurance business: equalisation reserve.

77. Exemption from regulation 76.

78. Default in complying with regulation 76(1).

Part XI

Statistical Information

79. Interpretation: Part XI.

80. Insurance statistics: EFTA States and EFTA companies.

81. Insurance statistics: other member States.

82. Default in complying with regulations 80 or 81.

83. Application of regulations 80 to 82 to Lloyd's.

Part XII

Miscellaneous Provisions

84. Transitory provision.

85. Consequential amendments.

86. Revocations.

Schedules

Schedule 1- Information to be submitted: long term business.

Schedule 2- Information to be submitted: general business.

Schedule 3- General business solvency margin: first method of calculation (premium basis).

Schedule 4- General business solvency margin: second method of calculation (claims basis).

Schedule 5- Minimum guarantee fund.

Schedule 6- Change of control etc.

Schedule 7- Statutory notice: non investment contracts.

Schedule 8- Statutory notice: investment contracts.

Schedule 9- Notice of cancellation.

Schedule 10- Permitted links.

Schedule 11- Value of dependants.

Schedule 12- Assets to be taken into account only to a specified extent.

Schedule 13- Relevant co-insurance operations.

Schedule 14- Methods of calculating the equalisation reserve for credit insurance business.

Schedule 15- Insurance statistics: EFTA States and EFTA companies.

Schedule 16- Insurance statistics: other member States.

Schedule 17- Revocations.

The Secretary of State, being a Minister designated ( a) for the purposes of section 2(2) of the European Communities Act 1972 ( b) in relation to the authorisation of the carrying on of insurance business and the regulation of such business and its conduct in exercise of the powers conferred by that section and by sections 2(5), 5(1)(a), 7(6), 9(1)(b) and (c) and (7), 15(6), 32(1), (2) and (3), 33(1), 35(1), 60(1), 61(1), 62(1), 72(1) and (2), 74(1) and (2) 75(2) and (5), 78(1), (2), (5) and (6), 84(1), 86, 90, 96(1) and 97 of the Insurance Companies Act 1982 ( c), hereby makes the following Regulations:

Part I

Preliminary

Citation and commencement

1. These Regulations may be cited as the Insurance Companies Regulations 1994 and shall come into force on 1st July 1994.

Interpretation: general

2. - (1) In these Regulations, unless the context otherwise requires

"the Act" means the Insurance Companies Act 1982;

"cede" and "cession", in relation to reinsurance, include retrocede and retrocession;

"credit insurance business" means all insurance business falling within general business class 14 of Part I of Schedule 2 to the Act that is not reinsurance;

"deposit back arrangement", in relation to any contract of reinsurance, means an arrangement whereby an amount is deposited by the reinsurer with the cedant;

"EEA margin of solvency" shall be construed in accordance with section 32 of the Act ( d);

"equalisation reserve" has the meaning given in regulation 76(1) below;

"guarantee fund" has the meaning given in regulation 22(1) below;

"linked long term contract" means a contract of the kind described in section 78 of the Act;

"mathematical reserves" means the provision made by an insurer to cover liabilities (excluding liabilities which have fallen due and liabilities arising from deposit back arrangements) arising under or in connection with contracts for long term business;

"minimum guarantee fund" has the meaning given in regulation 22(2) below;

"mutual" means an insurance company which is

(a) a body corporate having no share capital (except a wholly owned subsidiary with no share capital but limited by guarantee), or(b) a registered society;

"pure reinsurer" means

(a) an insurance company whose head office is in the United Kingdom and whose business is restricted to reinsurance business; or(b) an insurance company whose head office is not in the United Kingdom and whose business in the United Kingdom is restricted to reinsurance business;

"Schedule" means Schedule to these Regulations;

"the Stock Exchange" means the International Stock Exchange of the United Kingdom and the Republic of Ireland Limited;

(a) S.I. 1975/427, S.I. 1976/2141.

(b) 1972 c.68.

(c) 1982 c.50.

(d) Section 32 was amended by S.I. 1994/1696, reg. 14.

"United Kingdom margin of solvency" shall be construed in accordance with section 32 of the Act;

"unit of account" means the unit of account known as the ECU; and the words and expressions which are also used in the Act have the same meanings as in the Act.

(2) For the purposes of these Regulations, other than regulation 30, the rate of conversion from the ECU to the pound sterling shall, in the case of general business, be subject to a minimum of 41.66 pence per ECU.

Part II

Authorisation etc.

Benefits in kind

3. - (1) For the purposes of sections 2(5) and 15(6) of the Act there is hereby prescribed any contract of insurance which

(a) is a contract under which the benefits provided by the insurer are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle, and(b) contains the terms specified in paragraph (2) below.

(2) The terms referred to in paragraph (1) above are

(a) that, subject to such restrictions as may be set out in the contract, the assistance shall normally be available on demand at least throughout the mainland of Great Britain; but in no case is assistance to be available outside the United Kingdom and the Republic of Ireland except where it is provided without the payment of additional premium by a body in the country concerned with whom the insurer has entered into a reciprocal agreement;(b) that assistance provided in the case of an accident or breakdown occurring within the United Kingdom or the Republic of Ireland shall normally be provided by the insurer's servants or exceptionally by garages acting as the insurer's agents or appointed by the insurer;(c) that the assistance shall take either or both of the forms of assistance specified in paragraph (3) below.

(3) The forms of assistance referred to in paragraph (2) above are

(a) repairs to the relevant vehicle at the place where the accident or breakdown has occurred; this assistance may also include the delivery of parts, fuel, oil, water or keys to the relevant vehicle;(b) removal of the relevant vehicle either to the nearest or most appropriate place at which repairs may be carried out, or to(i) the home, point of departure or original destination within the United Kingdom of the driver and passengers provided the accident or breakdown occurred within the United Kingdom; or(ii) the home, point of departure or original destination within the Republic of Ireland of the driver and passengers provided the accident or breakdown occurred within the Republic of Ireland or within Northern Ireland; or(iii)...

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