Amendments to the Insolvency Arrangements for Insurers: Consultation
Detail of outcome
In May 2021, HM Treasury published the consultation document ‘Amendments to the Insolvency Arrangements for Insurers’. The consultation document sought views on proposals to amend the current insolvency arrangements for insurers, to enable the UK authorities to better manage insurers in financial distress.
This document summarises the responses received to the consultation and sets out the government’s response to the issues raised.
The government intends to legislate for these proposals when parliamentary time allows, and will continue to consult with relevant parties.
Original consultation
Consultation description
The government is proposing a series of targeted amendments to the current insurer insolvency arrangements.
These amendments include clarifications and enhancements to the court’s existing power, under section 377 of the Financial Services and Markets Act 2000 (FSMA), to order a reduction of the value of an insurer’s contracts (a ‘write-down’). They would also introduce new provisions to help mitigate business disruption and losses for insurers in distress, and a change to the protection provided by the Financial Services Compensation Scheme (FSCS) in the event of a write-down under section 377 FSMA.
These amendments would promote continuity of cover for policyholders by allowing earlier intervention by the regulatory authorities when an insurer was suffering financial distress, reduce costs to industry, and help maintain public confidence in the UK’s insurance sector.
Documents
Last updated 7 April 2022 + show all updates
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Updated with response to consultation document.
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First published.