The UK Government has announced a consultation on proposals to strengthen the administration regime for insurers, in particular to improve the protection and payment of benefits for persons insured with companies facing financial difficulties and addressing gaps in the administration regime for insurers as compared with the liquidation regime. The proposals include:
1. applying to administration the existing rules for valuing insurance contracts in liquidation; and
2. revising the objectives of administration in insurance company cases by:
- requiring administrators to provide assistance to the Financial Services Compensation Scheme to enable it to administer its compensation scheme and secure continuity of insurance contracts; and
- applying to administration existing powers relating to continuity of long term insurance contracts on the liquidation of an insurer.
The consultation closes on 25 June 2010.