Authorisation for insurance business

Section 19 of the Financial Services and Markets Act 2000 imposes an authorisation requirement on persons who carry on insurance business in the United Kingdom. If there is contravention of this provision a variety of civil and criminal consequences follow, including the ‘nuclear option’ that the Financial Services Authority may petition the court for a winding up order. Petitions were presented in Re Digital Satellite Warranty Cover Ltd [2011] EWHC 122 (Ch) against companies offering warranties on satellite television equipment. The issue was, were they carrying on insurance business at all?

The statutory background

The present law is based on the EU Directives which have harmonised the regulation of insurance business, although the principles found in the Directives were operative in England at an earlier date. The Directives confer a Single European Passport upon an insurer established and authorised in its home state, in return for minimum financial standards. Non-life insurance (general) is divided into 18 classes, and authorisation is required on a class-by-class basis. The Directives do not define ‘insurance’ and the classes simply refer to carrying on insurance business.