UK Law and Practice Contributed by: Clare Swirski, E. Drew Dutton, Hugo Laing and Rosamund Wood, Debevoise & Plimpton LLP
Debevoise & Plimpton LLP The Northcliffe 28 Tudor Street London EC4Y 0AY UK
Tel: +44 20 7786 9000 Fax: +44 20 7588 4180 Email: infouk@debevoise.com Web: www.debevoise.com
1. Basis of Insurance and Reinsurance Law 1.1 Sources of Insurance and Reinsurance Law The Financial Services and Markets Act 2000 (FSMA) is the principal source of law governing (re)insurance in the UK. The FSMA creates the framework for authori- sation, supervision and enforcement, supplemented by extensive secondary legislation and the rulebooks of the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). Much UK (re)insurance law implemented before Brexit reflected EU legislation, particularly Solvency II (Direc- tive 2009/138/EC). Solvency II was transposed into UK law through the FSMA, statutory instruments (most notably the Solvency 2 Regulations 2015) and PRA/ FCA rules. Directly applicable EU measures, including the Commission Delegated Regulation (EU) 2015/35, were retained post-Brexit and incorporated into the PRA rulebook. (Re)insurers should continue to com- ply with relevant EU guidance issued prior to Brexit. References to Solvency II in this chapter include the Directive and the Delegated Regulation as they apply in the UK. The Insurance Act 2015 (the “IA 2015”), in force from August 2016, rebalanced UK insurance contract law, codifying duties of fair presentation and reforming warranties, remedies and fraud rules. Other consumer- focused statutes – including the Consumer Insurance (Disclosure and Representations) Act 2012 (“CIDRA
2012”) and the Third Parties (Rights Against Insurers) Act 2010 – have also reshaped the legal environment. Post-Brexit, all amendments originate domestically, though the UK has largely preserved Solvency II’s overall structure (now “Solvency UK”). As a common law jurisdiction, judicial decisions in the UK remain essential in interpreting insurance con- tracts, governing disclosure, determining insurable interest and filling statutory gaps. 2. Regulation of Insurance and Reinsurance 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance Under the FSMA, (re)insurers in the UK are regulated by the PRA and the FCA, which are responsible for authorised firms’ prudential regulation and conduct supervision, respectively. UK (re)insurers are therefore often referred to as being “dual-regulated”. Insurance intermediaries such as brokers and managing general agents (MGAs) are regulated by the FCA only. The PRA Rulebook, the FCA Handbook and associ- ated supervisory statements are important sources of rules and guidance for the financial services firms to which they apply, including (re)insurers. The specialist (re)insurance market, Lloyd’s of London (“Lloyd’s”), is also regulated by the PRA and FCA, as are managing agents, and managing agents/under-
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