Insurance Companies (Third Insurance Directives) Regulations 1994

JurisdictionUK Non-devolved
CitationSI 1994/1696

1994 No. 1696

INSURANCE

The Insurance Companies (Third Insurance Directives) Regulations 1994

Made 27th June 1994

Coming into force 1st July 1994

Whereas the Secretary of State is designated1for the purposes of section 2(2) of the European Communities Act 19722in relation to compulsory insurance in respect of, and other means of providing for, civil liability in relation to motor vehicles and trailers, the transfer of insurance contracts other than contracts of life assurance from one insurance undertaking to another, and in relation to the authorisation of the carrying on of insurance business and the regulation of such business and its conduct, the specification of insurers who may effect insurance required under or by virtue of any enactment, and the transfer of contracts of life assurance from one insurance undertaking to another and in relation to anything supplemental or incidental to those matters;

And whereas a draft of these Regulations has been approved by a resolution of each House of Parliament pursuant to section 2(2) of and paragraph 2(2) of Schedule 2 to that Act;

Now, therefore, the Secretary of State in exercise of the powers conferred on him by section 2(2) of that Act and of all other powers enabling him in that behalf hereby makes the following Regulations:—

1 GENERAL

PART I

GENERAL

Citation, commencement and extent
S-1 Citation, commencement and extent

Citation, commencement and extent

1.—(1) These Regulations may be cited as the Insurance Companies (Third Insurance Directives) Regulations 1994 and shall come into force on 1st July 1994.

(2) These Regulations extend to Northern Ireland.

Interpretation
S-2 Interpretation

Interpretation

2.—(1) In these Regulations—

the 1982 Act” means the Insurance Companies Act 19823;

the 1986 Act” means the Financial Services Act 19864;

“the commencement date” means 1st July 1994.

(2) In these Regulations expressions which are also used in the 1982 Act or the 1986 Act have the same meanings as in that Act.

2 AMENDMENTS OF 1982 ACT

PART II

AMENDMENTS OF 1982 ACT

CHAPTER I

RESTRICTION ON CARRYING ON INSURANCE BUSINESS

Preliminary

Preliminary

S-3 Classification of long term business

Classification of long term business

3. At the end of Schedule 1 to the 1982 Act (classes of long term business) insert—

“VIII

Collective insurance etc.

Effecting and carrying out contracts of a kind referred to in Article 1(2)(e) of the first long term insurance Directive.

IX

Social insurance

Effecting and carrying out contracts of a kind referred to in Article 1(3) of the first long term insurance Directive.”

S-4 Restriction on carrying on insurance business

Restriction on carrying on insurance business

4.—(1) After subsection (1) of section 2 of the 1982 Act (restriction on carrying on insurance business) insert—

S-1A

“1A Subsection (1) above shall not apply to insurance business carried on by anEC company through a branch in respect of which such of the requirements of Part I of Schedule 2F to this Act as are applicable have been complied with.”

(2) After subsection (5) of that section insert—

S-6

“6 In this Act ‘EC company’ means an insurance company—

(a) which is incorporated in or formed under the law of a member State other than the United Kingdom;

(b) whose head office is in that member State; and

(c) which is authorised in accordance with Article 6 of the first general insurance Directive or Article 6 of the first long term insurance Directive.”

Applications for authorisation

Applications for authorisation

S-5 Sound and prudent management: criteria which must be fulfilled

Sound and prudent management: criteria which must be fulfilled

5.—(1) After subsection (1) of section 5 of the 1982 Act (submission of proposals etc.) insert—

S-1A

“1A The Secretary of State shall not issue an authorisation under section 3 above to an applicant which is a UK or non-EC company if it appears to him that the criteria of sound and prudent management are not or will not be fulfilled with respect to the applicant.”

(2) After subsection (3) of that section insert—

S-4

“4 In this Act—

‘criteria of sound and prudent management’ means the criteria set out in Schedule 2A to this Act;

‘EEA State’ means a State which is a Contracting Party to the EEA Agreement but, until the EEA Agreement comes into force in relation to Liechtenstein, does not include the State of Liechtenstein;

‘EFTA State’ means an EEA State which is not a member State;

‘non-EC company’ means an insurance company—

(a) whose head office is not in a member State;

(b) which is authorised under section 3 or 4 above; and

(c) whose business in the United Kingdom is not restricted to reinsurance business;

‘UK company’ means an insurance company—

(a) which is incorporated in the United Kingdom;

(b) whose head office is in the United Kingdom;

(c) which is authorised under section 3 or 4 above;

(d) whose business is not restricted to business to which subsection (5) below applies; and

(e) which is not excluded from each Directive mentioned in that subsection by Article 3 of that Directive;

and any reference in this Part to an applicant or body which is a UK or non-EC company includes a reference to an applicant or body which would be such a company if the authorisation sought by it were issued.

S-5

5 This subsection applies to—

(a) reinsurance business;

(b) business which is excluded from the first long term insurance Directive by Article 2(2) or (3) of that Directive;

(c) business which is excluded from the first general insurance Directive by Article 2(2)(b) of that Directive; and

(d) business which is exempted from the authorisation requirements contained in this Part of this Act by subsections (2) to (5) of section 2 above.”

(3) After Schedule 2 to the 1982 Act insert Schedule 1 to these Regulations (criteria ofsound and prudent management), as Schedule 2A.

S-6 Combination of long term and general business

Combination of long term and general business

6. For section 6 of the 1982 Act substitute—

S-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—

(a) the long term business is restricted to reinsurance; or

(b) the body is at the time the authorisation is issued already lawfully carrying on in the United Kingdom, otherwise than under paragraph (c) below, both long term business and general business (in neither case restricted to reinsurance); or

(c) in the case of a body which is a UK company, the general business is restricted to Group 1 of Part II to Schedule 2 to this Act (accident and health) or to any class or part of a class of insurance within that group.”

S-7 United Kingdom applicants

United Kingdom applicants

7.—(1) In subsection (3) of section 7 of the 1982 Act (United Kingdom applicants), for the words “whose head office is in the United Kingdom” substitute—

“(a)

“(a) whose head office is in the United Kingdom; and

(b)

(b) which is not an applicant to which section 5(1A) above applies,”.

(2) Subsections (4) to (8) of that section and Schedule 3 to that Act (which are superseded by regulations 50 and 52 to 54 below) shall cease to have effect.

S-8 Applicants from other EEA States etc.

Applicants from other EEA States etc.

8.—(1) In subsections (1), (2) and (3) of section 8 of the 1982 Act (applicants from other member States), for the words “applicant whose head office is in a member State other than the United Kingdom” substitute the words “applicant to which this section applies”.

(2) For subsection (3A) of that section5substitute—

S-3A

“3A An applicant is one to which this section applies if—

(a) its head office is in a member State other than the United Kingdom and it is not an EC company; or

(b) its head office is in an EFTA State; or

(c) its head office is in Switzerland and the authorisation sought by it is an authorisation to carry on general business which is not restricted to reinsurance business.”

(3) In subsection (4) of that section, the words “and ‘controller’, ‘manager’ and ‘main agent’ have the same meanings as in section 7 above” (which are superseded by regulation 50 below) shall cease to have effect.

S-9 Applicants from non-EEA States etc.

Applicants from non-EEA States etc.

9.—(1) In subsections (1) and (4) of section 9 of the 1982 Act (applicants from outside the Community), for the words “whose head office is not in a member State” substitute the words “to which this section applies”.

(2) In subsection (2) of that section, for the words “member States”, in both places where they occur, substitute the words “EEA States”.

(3) In subsection (5) of that section, for the words “to an applicant whose head office is not in a member State” substitute the words “which is restricted to reinsurance business to an applicant to which this section applies”.

(4) For subsection (5A) of that section6substitute—

S-5A

“5A An applicant is one to which this section applies if—

(a) its head office is not in an EEA State; and

(b) it is not an applicant to which section 8 above applies.”

(5) In subsection (6) of that section, the words from “In this section” to “except that” (which are superseded by regulation 50 below) shall cease to have effect.

Withdrawal of authorisation

Withdrawal of authorisation

S-10 Withdrawal of authorisation in respect of new business

Withdrawal of authorisation in respect of new business

10.—(1) For paragraph (aa) of subsection (2) of section 11 of the 1982 Act7(withdrawal of authorisation in respect of new business) substitute—

“(aa)

“(aa) that the company is a UK company and it appears to the Secretary of State that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another EEA State which—

(i) gives effect to the general or long term insurance Directives; or

(ii) is otherwise applicable to the insurance activities of the company in that State;

(ab...

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