The Insurance Act 2015 (the "Act") comes into force tomorrow. It represents a fundamental departure from existing insurance law. The changes impact on a number of key areas which are...11 August 2016
Russia substantially improves the portfolio transfer rules
The unpopularity of this institute mostly stemmed from poor legislative drafting, causing different interpretations from market players and the Russian Insurance Regulator, and also the necessity to seek individual consent from every client/insured/beneficiary of policies to be transferred. Moreover, the old law required the accepting insurer to match the terms of insurance with the donating insurer, which involved some burden of regulatory submission and registration of new terms of insurance, ahead of the proposed transaction.
The law, which came into force on 21 January 2014, substantially improved this situation.
Firstly, the old client/insured/beneficiary consent rule was replaced with a more reasonable individual objection rule, under which an insurer must make (1) a notice on its corporate web-site, (2) a notice on some designated published mass media, and (3) a notice to the Russian Central Bank (in its capacity as the Insurance Regulator). The client has 45 days to object to the transfer in writing, with notice being delivered to the insurer. As a result of the objection notice, the client insurance policy will terminate early generally with a pro rata refund of the paid insurance premium.
Secondly, the need to match the terms of insurance is now eliminated: the accepting insurer must fulfil all the policy obligations on the terms as they were issued and notify the Russian Insurance Regulator. Later the parties may agree any amendments to the benefit of the clients/insured/beneficiaries.
Furthermore, the old law only allowed a transfer of portfolio for equal consideration, and the new law is more flexible on this, allowing both the sale with a discount and upside.
This legislative development may be seen as a revival of a very useful instrument of transferring a portfolio between insurers, without involving either sale of the whole insurer or a prerequisite corporate reorganisation preceding the transfer of part of the insurer’s business to another company.
The Hogan Lovells’ Corporate Insurance Newsletter for July has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based...04 August 2016
Introduction03 August 2016