A series of instruments have been published by the Office of Public Sector Information (OPSI) to implement the Reinsurance Directive into law in the UK. For many Member States in the European Union, the Reinsurance Directive introduces regulation of pure reinsurers for the first time. The UK has, however, regulated reinsurers in much the same way as direct insurers for some time.
In order to implement the Directive, a few changes have had to be made to existing UK legislation by the deadline of the 10 December 2007. The Directive has already been partially implemented by existing provisions of the Financial Services and Markets Act 2000 (FSMA) and by rules made by the FSA and introduced into its Handbook. Many of the technical rules such as those on required solvency margins and minimum capital requirements have been introduced by the FSA already. The majority of changes took effect on 31 December 2006.
In July this year HM Treasury published a consultation paper entitled ‘Implementing the Reinsurance Directive: consultation document’ which included a number of proposed changes to the Financial Services and Markets Act 2000 (FSMA) as well as some suggested secondary legislation. The Treasury took a risk-based and proportionate approach to implementing the Directive. The proposals included a light-touch process for the transfer of reinsurance business under Part VII FSMA in addition to an appropriate passporting regime for reinsurers. The consultation closed on 17 October 2007. On 21 November 2007 the Treasury published details on the changes that it was going to make in order to implement the Reinsurance Directive through the following legislation:
- The Reinsurance Directive Regulations 2007 (SI 2007/3253)
- The Financial Services and Markets Act 2000 (Reinsurance Directive Regulations 2007) (SI 2007/3255)
- The Financial Services and Markets Act 2000 (Reinsurance Directive Order 2007) (SI 2007/3254)
An explanatory memorandum was published by the Treasury which contains a useful transposition table for the Reinsurance Directive. The main issues which the recently published instruments deal with are amendments to Part VII FSMA which deal with the transfer of insurance business and amendments to Schedule 3 FSMA which deal with the rights of UK reinsurers to passport into other EU Member States (and vice versa). Further amendments are made which allow for reinsurers established in Gibraltar to carry on business in the UK.
For further information see: HM Treasury’s explanatory memorandum on implementing measures
For further information see Preparing for the Reinsurance Directive