Policies made before 17 March 1998: transitional period: policyholder resident in UK on 17 March 1998
A policy that was taken out before 17 March 1998, and allows selection of assets by thepolicyholder to determine the benefits under the policy, was likely to satisfy thecriteria to be a PPB at 17 March 1998. This is because the terms of the policy wereunlikely to restrict selection only to the permitted categories listed in IPTM7795, since the policy will have been written before the PPBlegislation was introduced.
Transitional provision and condition for it to apply
However, a transitional period is allowed by the PPB legislation for policyholders andinsurers to vary the terms of the policy so that only property or indices within thepermitted categories listed in IPTM7795 can be selected.
This transitional provision only applies if at no time since 5 April 1994 havebenefits under the policy actually been determined by reference to property or an indexother than in the permitted categories listed in IPTM7795, eventhough the terms of the policy provided for this possibility.
The transitional period where the policyholder was resident in the UK on 17 March 1998 isdescribed below. The position for policyholders returning to become resident in the UKafter 17 March 1998 is described in IPTM7815.
Transitional period: policyholder resident in UK on 17 March 1998
If the policyholder was resident in the UK on 17 March 1998, the policyholder andinsurer had until the end of the first insurance year to begin on or after 6 April 1999 tomake the necessary variation to the policy.
For instance, if the policy was taken out on 5 September 1993, the policyholder had until4 September 2000 to agree with the insurer to vary the policy to limit the scope of theproperty that may be selected to the categories listed in IPTM7795.
In many cases, insurers will have notified policyholders during 1999 and 2000 to informthem that their pre-17 March 1998 policies would be PPBs unless the policies were variedto restrict the property and indices that may be selected by the policyholder. Providedthat the policyholder agreed to the necessary variation before the time limit, normally byway of a simple endorsement to the policy, such a policy is unlikely to be a PPB.
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