Policyholders Protection Act 1975

JurisdictionUK Non-devolved
Citation1975 c. 75


Policyholders ProtectionAct 1975

1975 CHAPTER 75

An Act to make provision for indemnifying (in whole or in part) or otherwise assisting or protecting policyholders and others who have been or may be prejudiced in consequence of the inability of authorised insurance companies carrying on business in the United Kingdom to meet their liabilities under policies issued or securities given by them, and for imposing levies on the insurance industry for the purpose; to authorise the disclosure of certain documents and information to persons appointed by the Secretary of State to advise him on the exercise of his powers under the Insurance Companies Act 1974; and for purposes connected with the matters aforesaid.

[12th November 1975]

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:—

The Policyholders Protection Board

The Policyholders Protection Board

S-1 The Policyholders Protection Board.

1 The Policyholders Protection Board.

(1) There shall be a body corporate, to be called the Policyholders Protection Board (hereafter in this Act referred to as ‘the Board’).

(2) The functions of the Board shall be—

(a ) to take the measures provided for by sections 6 to 16 below for the purpose of indemnifying (in whole or in part) or otherwise assisting or protecting policyholders and others who have been or may be prejudiced in consequence of the inability of insurance companies carrying on business in the United Kingdom to meet their liabilities under policies issued or securities given by them; and

(b ) for the purpose of financing their expenditure on the performance of their functions under those sections, to impose levies, in accordance with sections 19, 20 and 21 below and Schedules 2 and 3 to this Act, on insurance companies and other persons engaged in the insurance industry in the United Kingdom;

and otherwise to do anything requisite for carrying out the provisions of this Act.

(3) Subject to subsection (4) below, the Board shall have power to borrow any sums they may from time to time require for performing any of their functions under this Act.

(4) The aggregate amount outstanding in respect of the principal of any money borrowed by the Board under subsection (3) above shall not exceed 10 million.

(5) Schedule 1 to this Act shall have effect with respect to the constitution of the Board and the other matters there mentioned.

S-2 Guidance to the Board by the Secretary of State.

2 Guidance to the Board by the Secretary of State.

(1) Subject to subsection (2) below, the Secretary of State may from time to time, after consultation with the Board, give guidance to the Board in writing with respect to the performance of any of their functions under this Act; and it shall be the duty of the Board to perform the functions in question in such a manner as they consider is in accordance with the guidance for the time being given to them in pursuance of this section.

(2) No guidance shall be given to the Board in pursuance of subsection (1) above unless a draft of the document containing it has been approved by a resolution of each House of Parliament.

General scope of the Board's functions under this Act

General scope of the Board's functions under this Act

S-3 Authorised insurance companies.

3 Authorised insurance companies.

(1) The functions of the Board under this Act shall be exercisable in relation to policyholders and others who have been or may be prejudiced in consequence of the inability of insurance companies to meet their liabilities under policies issued or securities given by them only in cases where the insurance companies in question are authorised insurance companies.

(2) An insurance company is an authorised insurance company for the purposes of this Act if it is permitted by virtue of—

(a ) section 2(1)(a ) or (b ) or (2)(a ) of the Insurance Companies Act 1974 ; or

(b ) section 3(1)(a ) or (b ) or (2)(a ) of the Insurance Companies Act (Northern Ireland) 1968 ;

to carry on insurance business of any class in Great Britain or (as the case may be) in Northern Ireland.

S-4 Protection confined to United Kingdom policies.

4 Protection confined to United Kingdom policies.

(1) A policyholder is eligible for the assistance or protection of the Board in accordance with any provision of sections 6 to 16 below only in respect of a policy of insurance which was a United Kingdom policy for the purposes of this Act at the material time for the purposes of the provision in question.

(2) A policy of insurance is a United Kingdom policy for the purposes of this Act at any time when the performance by the insurer of any of his obligations under the contract evidenced by the policy would constitute the carrying on by the insurer of insurance business of any class in the United Kingdom.

Duties of the Board in case of companies in liquidation

Duties of the Board in case of companies in liquidation

S-5 Application of sections 6 to 11.

5 Application of sections 6 to 11.

(1) Subject to the following provisions of this section, the functions of the Board under sections 6 to 11 below are exercisable where in the case of any authorised insurance company—

(a ) a resolution has been passed, in accordance with the provisions of the Companies Act 1948 or (as the case may be) of the Companies Act (Northern Ireland) 1960 for the voluntary winding up of the company, otherwise than merely for the purpose of reconstruction of the company or of amalgamation with another insurance company; or

(b ) without any such resolution having been passed beforehand, an order has been made for the winding up of the company by the court under either of those Acts.

(2) Sections 6 to 11 shall not apply in a case falling within subsection (1)(a ) above (whether or not an order for the winding up of the company by or subject to the supervision of the court has been made since the resolution there mentioned was passed) unless the resolution was passed after 29th October 1974.

(3) Sections 6 to 11 shall not apply in a case falling within subsection (1)(b ) above unless the petition for the winding up of the company by the court was presented after 29th October 1974.

(4) References in this Act to a company in liquidation are references to an authorised insurance company in whose case—

(a ) a resolution has been passed as mentioned in subsection (1)(a ) above after 29th October 1974; or

(b ) an order has been made as mentioned in subsection (1)(b ) above on a petition presented after that date.

(5) References in this Act, in relation to a company in liquidation, to the beginning of the liquidation, are references—

(a ) in a case falling within subsection (1)(a ) above, to the passing of the resolution; and

(b ) in a case falling within subsection (1)(b ) above, to the making of the order.

S-6 Compulsory insurance policies and securities.

6 Compulsory insurance policies and securities.

(1) This section applies to any policy which satisfies the requirements of any of the following, that is to say—

(a ) section 1(4A)(d ) of the Riding Establishments Act 1964 or any corresponding enactment for the time being in force in Northern Ireland;

(b ) section 1 of the Employers' Liability (Compulsory Insurance) Act 1969 or Article 5 of the Employers' Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972 ; or

(c ) Part VI of the Road Traffic Act 1972 or Part V of the Road Traffic Act (Northern Ireland) 1970 ;

and to any policy evidencing a contract of insurance effected for the purposes of section 19 of the Nuclear Installations Act 1965 .

(2) This section applies to any security in respect of third-party risks given by an authorised insurance company which satisfies the requirements of Part VI of the Road Traffic Act 1972 or Part V of the Road Traffic Act (Northern Ireland) 1970.

(3) In this section ‘a liability subject to compulsory insurance’ means any liability required under any of the enactments mentioned in subsection (1) above to be covered by insurance or (as the case may be) by insurance or by some other provision for securing its discharge.

(4) Subject to sections 9, 13 and 14 below and the following provisions of this section,...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT