Modifications to the statutory scheme

Three recent and short statutory instruments came into force on 30 June 2008. The measures, all of which have been under discussion for some months, modify the transfer of insurance business rules in Part VII of the Financial Services and Markets Act 2000. The relevant measures are: the Financial Services and Markets Act 2000 (Control of Business Transfers) (Requirements on Applicants) (Amendment) Regulations 2008, SI 2008 No 1467, the Financial Services and Markets Act 2000 (Amendments to Part VII) Regulations 2008, SI 2008 No 1468, and the Financial Services and Markets Act 2000 (Amendment of Section 323) Regulations 2008, SI 2008 No 1469. All came into force on 30 June 2008.

The statutory modifications: reinsurance

Part VII of the 2000 Act sets out the regime for the transfer of insurance business. In outline, this can be done only with the sanction of the court following the submission of an initial application and the receipt of various reports on the transfer including comments by interested parties and by the Financial Services Authority. Where a transfer is approved, then under s112 of the 2000 Act the transfer relates to the whole or the relevant part of the undertaking concerned. In WASA International (UK) Insurance Co Ltd v WASA International Insurance Co Ltd [2002] EWHC 2698 (Ch) it was held that the effect of a sanction was to transfer not just the business written by the insurer but also any outward reinsurance contracts held by the insurer relating to the transferred business. To that extent the legislation was held to constitute an exception to the rule that the benefit of a reinsurance contract cannot be assigned without the consent of the reinsurers.