Insurance insolvencies - Extension of administration to insurance companies

(Financial Services and Markets Act 2000 (Administration Orders Relating to Insurers) Order 2002)

Of the various insolvency regimes applicable to insurance companies, that of administration has to date been unavailable, by virtue of s8(4) of the Insolvency Act 1986. The Financial Services and Markets Act 2002, s360, conferred upon the Treasury the power to remove this restriction and to open the administration procedure to insurance companies. That power has now been exercised by the Financial Services and Markets Act 2000 (Administration Orders Relating to Insurers) Order 2002, SI 2002 No 1242, which came into effect on 31 May 2002. The Order makes various modifications to the Insolvency Act 1986 in its application to insurance companies. Administration will provide an alternative to the present structure, under which insolvent insurers are in practice put into provisional liquidation.