LAM13030 - Transfers of long-term business: Summary of the process for FSMA 2000/Part VII of transfers
Transfers of insurance business essentially transfer the contract that has been agreed between the insurer and the policyholder to another insurer without the need to obtain the policyholder’s consent (see LAM13010).
Therefore any transfer of insurance business is required to follow a carefully defined process, designed to protect the policyholders’ interests and to make sure that they do not suffer any material adverse impact. All affected policyholders must be notified of the scheme.
To ensure this happens FSMA00/Part VII requires that all insurance business transfer schemes must obtain Court approval before they can take place. The key requirements are that affected policyholders must be notified of the scheme and the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are consulted from the outset. In the case of with-profits business a report must be prepared by an Independent Expert. Transfers of non-profit or general business may also require a report by an Independent Expert.
The report will include a description of the scheme, so reading it is often the best starting point to understand what the scheme is doing.
The role of the regulators include:
- being notified of the scheme and involved in discussions from the outset
- leading discussions with any overseas regulatory body that may be involved
- approving the appointment of an Independent Expert to report to the Court
- having the right to make written representations and to be heard before the Court
Further details of the process can be found in SUP 18.2 Insurance business transfers within the FCA handbook.