Insurance Companies Act 1981
| Year | 1981 |
Insurance Companies Act 1981
1981 CHAPTER 31
An Act to amend the law relating to insurance companies.
[2nd July 1981]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I
Restriction on Carrying on Insurance Business
Preliminary
1 Classification.
(1) For the purposes of this Act and of the Insurance Companies Act 1974 (‘the 1974 Act’) insurance business is divided into long term business and general business; and—
‘long term business’ means insurance business of any of the classes specified in Schedule 1 to this Act, and
‘general business’ means insurance business of any of the classes specified in Part I of Schedule 2 to this Act.
(2) For the purposes of this Act and the 1974 Act the effecting and carrying out of a contract whose principal object is within one class of insurance business, but which contains related and subsidiary provisions within another class or classes, shall be taken to constitute the carrying on of insurance business of the first-mentioned class, and no other, if subsection (3) or (4) below applies to the contract.
(3) This subsection applies to a contract whose principal object is within any class of long term business but which contains subsidiary provisions within general business class 1 or 2 if the insurer is authorised under section 3 or 4 below to carry on long term business class I.
(4) This subsection applies to a contract whose principal object is within one of the classes of general business but which contains subsidiary provisions within another of those classes, not being class 14 or 15.
2 Restriction on carrying on insurance business.
(1) Subject to the following provisions of this section, no person shall carry on any insurance business in the United Kingdom unless authorised to do so under section 3 or 4 below.
(2) Subsection (1) above shall not apply to insurance business (other than industrial assurance business) carried on—
(a ) by a member of Lloyd's; or
(b ) by a body registered under the enactments relating to friendly societies; or
(c ) by a trade union or employers' association where the insurance business carried on by the union or association is limited to the provision for its members of provident benefits or strike benefits.
In this subsection ‘trade union’ and ‘employers' association’ have (throughout the United Kingdom) the meanings assigned to them by section 28 of the Trade Union and Labour Relations Act 1974 .
(3) Subsection (1) above shall not apply to industrial assurance business carried on by a friendly society registered under the enactments relating to such societies.
(4) Subsection (1) above shall not apply to general business of class 14, 15, 16 or 17 if it is carried on solely in the course of carrying on, and for the purposes of, banking business.
(5) Subsection (1) above shall not apply to general business consisting in the effecting and carrying out, by an insurance company that carries on no other insurance business, of contracts of such descriptions as may be prescribed, being contracts under which the benefits provided by the insurer are exclusively or primarily benefits in kind.
Authorised insurance companies
3 Authorisation by Secretary of State.
(1) The Secretary of State may authorise a body to carry on in the United Kingdom such of the classes of insurance business specified in Schedule 1 or 2 to this Act, or such parts of those classes, as may be specified in the authorisation.
(2) An authorisation under this section may be restricted to industrial assurance business or to reinsurance business; and a body may not carry on industrial assurance business by virtue of an authorisation under this section unless the authorisation expressly extends to such business.
(3) An authorisation under this section may identify classes or parts of classes of general business by referring to the appropriate groups specified in Part II of Schedule 2 to this Act.
(4) On the issue to a body of an authorisation under this section, any previous authorisation of that body under this section or section 4 below shall lapse.
4 Existing insurance companies.
(1) A body that was, immediately before the commencement of this section, authorised under section 3 of the 1974 Act to carry on in the United Kingdom insurance business of a class relevant for the purposes of that Act (or of any part of such a class) shall be authorised to carry on there insurance business of the corresponding class specified in Schedule 1 or 2 to this Act (or of the appropriate part of that class).
(2) For the purposes of subsection (1) above, each of the two classes of long term business relevant for the purposes of the 1974 Act shall be taken to correspond with classes I, II, III, IV, VI, and VII in Schedule 1 to this Act; and a class of general business relevant for the purposes of the 1974 Act shall be taken to correspond with the class identified in Part I of Schedule 2 to this Act by the same number.
(3) A body may not carry on industrial assurance business by virtue of this section unless it was carrying on such business immediately before the commencement of this Act.
Applications for authorisation
5 Submission of proposals etc.
(1) The Secretary of State shall not issue an authorisation under section 3 above unless—
(a ) the applicant has submitted to him such proposals as to the manner in which it proposes to carry on business, such financial forecasts and such other information as may be required by or in accordance with regulations under the 1974 Act, and
(b ) he is satisfied on the basis of that and any other information received by him that the application ought to be granted.
(2) The Secretary of State shall decide an application for an authorisation under section 3 above within six months of receiving the information referred to in subsection (1)(a ) above; and if he refuses to issue the authorisation he shall inform the applicant in writing of the reasons for the refusal.
6 Combination of long term and general business.
6. The Secretary of State shall not under section 3 above authorise a body to carry on both long term business and general business unless—
7 United Kingdom applicants.
(1) The Secretary of State shall not issue an authorisation under section 3 above to an applicant whose head office is in the United Kingdom unless the applicant is—
(a ) a company as defined in section 455 of the Companies Act 1948 or section 399 of the Companies Act (Northern Ireland) 1960 , or
(b ) a registered society, or
(c ) a body corporate established by royal charter or Act of Parliament and already authorised under section 3 or 4 above to carry on insurance business (though not to the extent proposed in the application).
(2) The Secretary of State shall not issue an authorisation under section 3 above to an applicant whose head office is in the United Kingdom if it has an issued share capital any part of which was issued after the commencement of this section but is not fully paid up.
(3) The Secretary of State shall not issue an authorisation under section 3 above to an applicant whose head office is in the United Kingdom if it appears to the Secretary of State that any director, controller, manager or main agent of the applicant is not a fit and proper person to hold the position held by him.
(4) In this section ‘controller’, in relation to the applicant, means—
(a ) a managing director of the applicant or of a body corporate of which the applicant is a subsidiary;
(b ) a chief executive of the applicant or of a body corporate, being an insurance company, of which the applicant is a subsidiary;
(c ) a person—
(i) in accordance with whose directions or instructions the directors of the applicant or of a body corporate of which it is a subsidiary are accustomed to act, or
(ii) who either alone or with any associate or associates is entitled to exercise, or control the exercise of, one-third or more of the voting power at any general meeting of the applicant or of a body corporate of which it is a subsidiary.
(5) In this section ‘manager’, in relation to the applicant, means an employee of the applicant (other than a chief executive) who, under the immediate authority of a director or chief executive of the applicant—
(a ) exercises managerial functions, or
(b ) is responsible for maintaining accounts or other records of the applicant,
not being a person whose functions relate exclusively to business conducted from a place of business outside the United Kingdom.
(6) In this section ‘main agent’, in relation to the applicant, means, subject to such exceptions as may be prescribed...
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