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Insurance regulatory news, 22 February 2021

22 February 2021

Recent regulatory developments of interest to insurers and their intermediaries. See also our Financial institutions general regulatory news in the Related Materials links.

Content

COVID-19: FCA update on BI insurance test case

The UK Financial Conduct Authority (FCA) has updated its webpage on its business interruption (BI) insurance test case.

The FCA and the other parties to the test case have made written submissions to the Supreme Court on the form of the declarations to be issued by the court. These declarations will be the culmination of the judgments in the test case and will declare whether the policies in the representative sample potentially cover business interruption losses arising from the COVID-19 pandemic.

The FCA has published:

a draft of the declarations showing which parts are agreed and which remain in dispute;
submissions of the FCA;
joint submissions of Arch, Argenta, Hiscox, MS Amlin, QBE and RSA in relation to common declarations;
submissions of Arch Insurance (UK) Ltd in relation to its specific declarations;
joint submissions of Ecclesiastical Insurance Office plc and MS Amlin Underwriting Limited in relation to their specific declarations;
submissions of Hiscox Insurance Company Ltd in relation to its specific declarations;
submissions of Royal & Sun Alliance Insurance Plc in relation to its specific declarations; and
submissions of the Hiscox Action Group.

The FCA expects that the Supreme Court will issue the declarations without a further hearing, but it does not know when.

The FCA believes that the judgment from the Supreme Court gives insurers the clarity they need to conclude their claims processes with most of their business interruption customers, without waiting for the declarations.

EU Solvency II: Implementing Regulation on technical information for calculating technical provisions and basic own funds for Q1 2021 reporting

Commission Implementing Regulation (EU) 2021/178, which lays down technical information for the calculation of technical provisions and basic own funds for reporting under the Solvency II Directive has been published in the Official Journal of the EU (OJ).

The Implementing Regulation was made under Article 77e(2) of the Solvency II Directive and sets out the technical information for reinsurers and insurers to use when calculating technical provisions and basic own funds for reporting with reference dates between 31 December 2020 and 30 March 2021.

The Implementing Regulation entered into force on 17 February 2021 and applies from 31 December 2020.

BI insurability in light of pandemics: EIOPA staff paper

The European Insurance and Occupational Pensions Authority (EIOPA) has published a staff paper on measures to improve the insurability of business interruption in light of pandemics. Building on its issues paper on shared resilience solutions for pandemics, published in July 2020, EIOPA analyses options relating to prevention measures to reduce losses, capital markets risk transfer, and multi-peril solutions for systemic risk. It also addresses the general challenges related to modelling and triggers for claims in the context of pandemics.

Comments can be made on the paper until 31 March 2021.