Textual Amendments
F1Words in cross heading preceding s. 5 inserted (prosp.) by Friendly Societies Act 1992 (c. 40), ss. 97, 126(2), Sch. 17 para. 4 (with ss. 7(5), 93(4))
(1)Subject to the following provisions of this section, the functions of the Board under sections 6 to 11 below are exercisable where in the case of any authorised insurance company—
(a)a resolution has been passed, in accordance with the provisions of the [F2Insolvency Act 1986] or (as the case may be) of the [F3Insolvency (Northern Ireland) Order 1989] for the voluntary winding up of the company, otherwise than merely for the purpose of reconstruction of the company or of amalgamation with another insurance company; or
(b)without any such resolution having been passed beforehand, an order has been made for the winding up of the company by the court under either of those Acts.
(2)Sections 6 to 11 shall not apply in a case falling within subsection (1)(a) above (whether or not an order for the winding up of the company by [F4or subject to the supervision of] the court has been made since the resolution there mentioned was passed) unless the resolution was passed after 29th October 1974.
(3)Sections 6 to 11 shall not apply in a case falling within subsection (1)(b) above unless the petition for the winding up of the company by the court was presented after 29th October 1974.
(4)References in this Act to a company in liquidation are references to an authorised insurance company in whose case—
(a)a resolution has been passed as mentioned in subsection (1)(a) above after 29th October 1974; or
(b)an order has been made as mentioned in subsection (1)(b) above on a petition presented after that date.
(5)References in this Act, in relation to a company in liquidation, to the beginning of the liquidation, are references—
(a)in a case falling within subsection (1)(a) above, to the passing of the resolution; and
(b)in a case falling within subsection (1)(b) above, to the making of the order.
Textual Amendments
F2Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14
F3Words in s. 5(1)(a) substituted (1.10.1991) by virtue of S.I. 1989/2405 (N.I. 19), art. 381(2), Sch. 9 para. 26; S.R. 1991/411, art.2
F4Words repealed (E.W.S.) by Insolvency Act 1985 (c. 65, SIF 66), s. 235(3), Sch. 10 Pt. II and Insolvency Act 1986 (c. 45, SIF 66), Sch. 11 para. 7
Prospective
(1)The functions of the Board under sections 8A, 10 and 11 below are exercisable in the case of a registered friendly society if—
(a)an order has been made for the winding up of the society on a petition under section 87 of the M1Friendly Societies Act 1974;
(b)it has terminated under paragraph (a) of subsection (1) of section 93 of that Act upon the happening of an event;
(c)it has been dissolved in accordance with paragraph (b) of that subsection; or
(d)an award has been made under section 95 or section 95A of that Act.
(2)The functions of the Board under sections 8, 10 and 11 below are exercisable in the case of an incorporated friendly society if—
(a)an instrument of dissolution has been approved under section 20 of the Friendly Societies Act 1992;
(b)a special resolution that it be wound up voluntarily has been passed under section 21 of that Act; or
(c)an order has been made for the winding up of the society on a petition under section 22 or 52 of that Act.
(3)In this Act “closing society” means a friendly society in the case of which the Board’s functions are exercisable under subsection (1) or (2) above.
(4)References in this Act to the beginning of the liquidation of a closing society are references—
(a)in a case falling within paragraph (a) of subsection (1) above, to the date of the order;
(b)in a case falling within paragraph (b) of that subsection, to the date of the happening of the event;
(c)in a case falling within paragraph (c) of that subsection, to the date of signature of the instrument of dissolution;
(d)in a case falling within paragraph (d) of that subsection, to the date of the award;
(e)in a case falling within paragraph (a) of subsection (2) above, to the date of signature of the instrument of dissolution;
(f)in a case falling within paragraph (b) of that subsection, to the date of the passing of the special resolution; and
(g)in a case falling within paragraph (c) of that subsection, to the date of the order.]
Textual Amendments
F5S. 5A inserted (prosp.) by Friendly Societies Act 1992 (c. 40), ss. 97, 126(2), Sch. 17 para. 5 (with ss. 7(5), 93(4))
Marginal Citations
(1)This section applies to any policy which satisfies the requirements of any of the following, that is to say—
(a)section 1(4A)(d) of the M2Riding Establishments Act 1964 or any corresponding enactment for the time being in force in Northern Ireland;
(b)section 1 of the M3Employers’ Liability (Compulsory Insurance) Act 1969 or Article 5 of the M4Employers’ Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972; or
(c)[F6Part VI of the Road Traffic Act 1988]or [F7Part VIII of the Road Traffic (Northern Ireland) Order 1981];
and to any policy evidencing a contract of insurance effected for the purposes of section 19 of the M5Nuclear Installations Act 1965.
(2)This section applies to any security in respect of third-party risks given by an authorised insurance company which satisfies the requirements of [F6Part VI of the Road Traffic Act 1988]or [F7Part VIII of the Road Traffic (Northern Ireland) Order 1981].
(3)In this section “a liability subject to compulsory insurance” means any liability required under any of the enactments mentioned in subsection (1) above to be covered by insurance or (as the case may be) by insurance or by some other provision for securing its discharge.
(4)Subject to sections 9, 13 and 14 below and the following provisions of this section, it shall be the duty of the Board to secure that a sum equal to the full amount of any liability of a company in liquidation towards any policyholder or security holder under the terms of any policy or security to which this section applies is paid to the policyholder or security holder as soon as reasonably practicable after the beginning of the liquidation.
(5)Subsection (4) above does not apply by reference to any liability of a company in liquidation under the terms of a policy to which this section applies arising otherwise than in respect of a liability of the policyholder which is a liability subject to compulsory insurance.
(6)Subject to sections 9, 13 and 14 and subsection (8) below, it shall be the duty of the Board to secure that a sum equal to ninety per cent. of the amount of any liability of a company in liquidation towards a private policyholder under the terms of any policy to which this section applies, being a liability arising otherwise than in respect of a liability of the policyholder which is a liability subject to compulsory insurance, is paid to the policyholder as soon as reasonably practicable after the beginning of the liquidation.
(7)In subsection (6) above “private policyholder” means a policyholder who is either—
(a)an individual; or
(b)a partnership or other unincorporated body of persons all of whom are individuals.
(8)The duty of the Board under subsection (4) or (6) above shall not apply—
(a)in the case of any policy, unless it was a United Kingdom policy at the beginning of the liquidation; or
(b)in the case of any security in respect of third-party risks, unless it would have been a United Kingdom policy at the beginning of the liquidation if it had been an insurance policy and the contract governing the security had been a contract of insurance.
(9)References hereafter in this Act to policies which were United Kingdom policies at any time and to policyholders in respect of such policies shall be construed as including references to—
(a)securities to which this section applies which would have been United Kingdom policies at the time in question if they had been insurance policies and the contracts governing the securities had been contracts of insurance; and
(b)security holders in respect of such securities.
Textual Amendments
F6Words substituted by Road Traffic (Consequential Provisions) Act 1988 (c. 54, SIF 107:1), ss. 4, 5, Sch. 3 para. 14(1), Sch. 4 paras. 1, 2
F7Words substituted by S.I. 1981/160, art. 6(a)
Marginal Citations
Without prejudice to section 6 above, but subject to sections 9, 13 and 14 below, it shall be the duty of the Board to secure that a sum equal to the full amount of any liability of a company in liquidation in respect of a sum payable to a person entitled to the benefit of a judgment under—
(a)section 149 of the M6Road Traffic Act 1972 [F8or section 151 of the Road Traffic Act 1988] (duty of insurers to satisfy judgment against persons insured or secured against third-party risks); or
(b)[F9Article 98 of the Road Traffic (Northern Ireland) Order 1981] (court orders for recovery from insurers of sums due under unsatisfied judgments against persons insured or secured by them);
is paid to that person as soon as reasonably practicable after the beginning of the liquidation.
Textual Amendments
F8Words inserted by Road Traffic (Consequential Provisions) Act 1988 (c. 54, SIF 107:1), ss. 4, 5, Sch. 3 para. 14(2), Sch. 4 paras. 1, 2
F9Words substituted by S.I. 1981/160, art. 6(b)
Marginal Citations
(1)This section applies to any general policy other than a policy to which section 6 above applies.
(2)Subject to sections 9, 13 and 14 below, it shall be the duty of the Board to secure that a sum equal to ninety per cent. of the amount of any liability of a company in liquidation towards a private policyholder under the terms of any policy to which this section applies which was a United Kingdom policy at the beginning of the liquidation is paid to the policyholder as soon as reasonably practicable after the beginning of the liquidation.
(3)In subsection (2) above “private policyholder” has the same meaning as in section 6(6) above.
(4)In this Act “general policy” means any policy evidencing a contract the effecting of which constituted the carrying on of general business of any class, [F10other than class 5, 6, 7, 11 or 12, not being a contract of reinsurance].
Textual Amendments
F10Words substituted by Insurance Companies Act 1981 (c. 31, SIF 67), s. 36, Sch. 4 Pt. II para. 25(3)
Prospective
(1) Subject to sections 13 and 14 and subsection (2) below, where the Board’s functions are exercisable in relation to a closing society, it shall be the duty of the Board to secure that a sum equal to ninety per cent of the amount of any liability of the society to a private policyholder (within the meaning of section 6(7) above) under the terms of a contract the effecting of which constituted the carrying on of general business of any class and which is a qualifying policy is paid to the member as soon as reasonably practicable after the beginning of the liquidation.
(2)The duty of the Board under subsection (1) above shall only apply if the liability is in respect of a protected risk]
Textual Amendments
F11S. 8A inserted (prosp.) by Friendly Societies Act 1992 (c. 40), ss. 97, 126(2), Sch. 17 para. 7 (as amended (19.3.1997) by 1997 c. 18, ss. 20(1), 23(2), Sch. 4 para. 4) (with ss. 7(5), 93(4))
(1)The Board shall not by virtue of any provision of sections 6 to 8 above be required to secure any sum for a policyholder in respect of a policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation or (as the case may be) for a person entitled to the benefit of a judgment by reference to any liability (or any part of any liability) of a company in liquidation which is duplicated by the liability of any other authorised insurance company which is not a company in liquidation.
(2)A liability of a company towards a policyholder is duplicated by the liability of another company for the purposes of subsection (1) above in so far as that other company is also under a liability, under the terms of any general policy which was a United Kingdom policy at the beginning of the first-mentioned company’s liquidation, to make any payment to or on behalf of the policyholder in respect of the matter to which the liability of the first-mentioned company relates.
(3)A liability of a company in respect of a sum payable under section 149 of the M7Road Traffic Act 1972 [F12section 151 of the Road Traffic Act 1988] or [F13Article 98 of the Road Traffic (Northern Ireland) Order 1981] to a person entitled to the benefit of a judgment is duplicated by the liability of another company for the purposes of subsection (1) above in so far as that other company is also liable under either [F14that section or that Article] to pay any sum to that person in respect of the same judgment.
Textual Amendments
F12Words inserted by Road Traffic (Consequential Provisions) Act 1988 (c. 54, SIF 107:1), ss. 4, 5, Sch. 3 para. 14(3), Sch. 4 paras. 1, 2
F13Words substituted by S.I. 1981/160, art. 6(c)(i)
F14Words substituted by S.I. 1981/160, art. 6(c)(ii)
Marginal Citations
(1)In this Act “long term policy” means any policy evidencing a contract the effecting of which constituted the carrying on of long term business. . . F15, not being a contract of reinsurance.
(2)Subject to sections 13 and 14 below, it shall be the duty of the Board to secure that a sum equal to ninety per cent. of the amount of any liability of a company in liquidation towards any policyholder under the terms of a long term policy which was a United Kingdom policy at the beginning of the liquidation is paid to the policyholder as soon as reasonably practicable after the beginning of the liquidation.
Textual Amendments
F15Words repealed by Insurance Companies Act 1981 (c. 31, SIF 67), s. 36, Sch. 5 Pt. I
Modifications etc. (not altering text)
C1S. 10 modified (24.9.1996) by 1996 c. 48, ss. 4(1)-(3), 8(3)
(1)Subject to subsection (2) below, in this section “future benefit”, in relation to any long term policy of a company in liquidation, means any benefit provided for under the policy which has not fallen due to be paid by the company before the beginning of the liquidation.
(2)Any bonus provided for under a policy shall not by virtue of subsection (1) above be treated as a future benefit within the meaning of this section unless it was declared before the beginning of the liquidation.
(3)Subject to sections 13 and 14 below and to the following provisions of this section, it shall be the duty of the Board, as soon as reasonably practicable after the beginning of the liquidation, to make arrangements in pursuance of subsection (5) below for securing continuity of insurance for every policyholder of a company in liquidation who is a policyholder in respect of a long term policy which was a United Kingdom policy at the beginning of the liquidation.
(4)Subject to subsection (6) below, the duty of the Board under subsection (3) above to secure continuity of insurance for any policyholder extends only to securing that the policyholder will receive ninety per cent. of any future benefit under his policy, subject to and in accordance with terms corresponding so far as appears to the Board to be reasonable in the circumstances to the terms which would have applied under the policy.
(5)For the purpose of securing continuity of insurance for any policyholders of a company in liquidation in accordance with subsection (3) above, the Board may take such measures as appear to them to be appropriate—
(a)for securing or facilitating the transfer of the long term business of the company, or of any part of that business, to another authorised insurance company; or
(b)for securing the issue by another authorised insurance company to the policyholders in question of policies in substitution for their existing policies.
(6)Where a long term policy of a company in liquidation contains terms relating to matters other than future benefits under the policy the duty of the Board under subsection (3) above to secure continuity of insurance for the policyholder in question extends also to securing that the policy after any transfer of business in which it is included or (as the case may be) any policy issued in substitution for the policy in question contains terms relating to those matters which correspond so far as appears to the Board to be reasonable in the circumstances to the terms first mentioned above.
(7)During any period while the Board are seeking to make arrangements for securing continuity of insurance for any policyholders of a company in liquidation in accordance with subsection (3) above, it shall be the duty of the Board, subject to sections 13 and 14 and subsection (11) below, to secure that ninety per cent. of any future benefit under a long term policy which would have fallen due to be paid to any of those policyholders during that period is paid to the policyholder in question as soon as reasonably practicable after the time when the benefit in question would have fallen due under the policy (but subject to and in accordance with any other terms which would have applied under the policy).
(8)Arrangements made by the Board in pursuance of subsection (5) above shall not be required to cover any future benefit under a policy in so far as any sums have been paid to the policyholder in pursuance of subsection (7) above by reference to that benefit.
(9)Where it appears to the Board that it is not reasonably practicable to secure continuity of insurance for any policyholder of a company in liquidation in accordance with subsection (3) above, it shall be the duty of the Board, subject to sections 13 and 14 and subsection (10) below, to pay to the policyholder a sum equal to ninety per cent. of the value attributed to his policy for the purposes of any claim in respect of his policy in the winding up of the company, as soon as reasonably practicable after any such claim is admitted.
(10)The [F16Treasury] may by regulations made by statutory instrument—
(a)require the Board, in a case to which subsection (9) above applies, to pay to the policyholder at his option, instead of the sum there mentioned, a sum equal to ninety per cent. of the value of the future benefits under his policy, or of such of those benefits as may be specified by the regulations, determined in such manner as the regulations may provide;
(b)make such provision as appears to [F17the Treasury] to be appropriate with respect to the time within which and the manner in which the Board are to perform any of their functions under this section (including any function conferred on them by virtue of paragraph (a) above).
(11)Any duty of the Board under subsection (3) or (7) above to take any measures for assisting a policyholder of a company in liquidation shall be subject to compliance on his part with any conditions imposed by the Board with respect to the payment, in any case or in any class or description of case, of sums which would have fallen due from policyholders of a company in liquidation by way of premiums under long term policies if the company had not gone into liquidation.
Textual Amendments
F16Words in s. 11(10) substituted (5.1.1998) by S.I. 1997/2781, arts. 2(1), 8(1), Sch. Pt. II para. 99 (with art. 7)
F17Words in s. 11(10)(b) substituted (5.1.1998) by S.I. 1997/2781, arts. 2(1), 8(1), Sch. Pt. II para. 100 (with art. 7)
Modifications etc. (not altering text)
C2S. 11 modified (24.9.1996) by 1996 c. 48, ss. 4(1)-(3), 8(3)
Sections 12, 13, 14(2) to (9) and 15 shall apply to a closing society as they apply to a company in liquidation.]
Textual Amendments
F18S. 11A inserted (1.2.1993) by 1992 c. 40, s. 97, Sch. para.10 (with ss. 7(5), 93(4)); S.I. 1993/16, art. 2, Sch. 3 (with transitional provisions in arts. 3-11)
(1)If it appears to the Board, in the case of any long term policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation, that the benefits provided for thereunder are or may be excessive in any respect, having regard to the premiums paid or payable and to any other terms of the policy, the Board shall refer the policy to an independent actuary.
(2)This subsection applies in any case where an actuary to whom a policy is referred under subsection (1) above makes to the Board a report in writing—
(a)stating, with respect to any of the benefits provided for under the policy, that in his view the benefit or benefits in question are excessive; and
(b)recommending, accordingly, that for the purposes of sections 10 and 11 above any liability of the company under the policy or any future benefit under the policy should be treated as reduced or (as the case may be) disregarded.
(3)In any case to which subsection (2) above applies the Board may determine in the light of any recommendation contained in the actuary’s report that the liability or benefit to which that recommendation relates shall be treated as reduced or disregarded for the purposes of sections 10 and 11 above; and where the Board so determine the liability or benefit in question shall be treated as reduced or (as the case may be) disregarded accordingly for the purposes of the application of section 10, of any provision of subsections (3) to (7) of section 11, or of any provision of any regulations made under subsection (10) of section 11 above (as the case may require) in relation to the policy in question.
(4)This subsection applies in any case where—
(a)a claim has been admitted in the winding up of a company in respect of any policy which is the subject of a report by an actuary under subsection (2) above; and
(b)that report indicates, or the actuary makes to the Board a further report in writing indicating, what value would in his view have been attributed to the policy in the winding up if any future benefit under the policy to which any recommendation in the report under subsection (2) above relates had been treated as reduced or disregarded in accordance with the recommendation in determining the claim in respect of the policy in the winding up.
(5)In any case to which subsection (4) above applies the Board may determine in the light of the value indicated in the actuary’s report that the value attributed to the policy in question for the purposes of the claim in respect of the policy in the winding up shall be treated as reduced for the purpose of calculating the sum payable to the policyholder in accordance with subsection (9) of section 11 above; and where the Board so determine the value so attributed to the policy shall be treated as reduced for that purpose accordingly.
(6)In this section “future benefit” has the same meaning as in section 11 above.
Textual Amendments
F1Words in cross heading preceding s. 5 inserted (prosp.) by Friendly Societies Act 1992 (c. 40), ss. 97, 126(2), Sch. 17 para. 4 (with ss. 7(5), 93(4))
(1)Subject to the following provisions of this section, the functions of the Board under sections 6 to 11 below are exercisable where in the case of any authorised insurance company—
(a)a resolution has been passed, in accordance with the provisions of the [F2Insolvency Act 1986] or (as the case may be) of the [F3Insolvency (Northern Ireland) Order 1989] for the voluntary winding up of the company, otherwise than merely for the purpose of reconstruction of the company or of amalgamation with another insurance company; or
(b)without any such resolution having been passed beforehand, an order has been made for the winding up of the company by the court under either of those Acts.
(2)Sections 6 to 11 shall not apply in a case falling within subsection (1)(a) above (whether or not an order for the winding up of the company by [F4or subject to the supervision of] the court has been made since the resolution there mentioned was passed) unless the resolution was passed after 29th October 1974.
(3)Sections 6 to 11 shall not apply in a case falling within subsection (1)(b) above unless the petition for the winding up of the company by the court was presented after 29th October 1974.
(4)References in this Act to a company in liquidation are references to an authorised insurance company in whose case—
(a)a resolution has been passed as mentioned in subsection (1)(a) above after 29th October 1974; or
(b)an order has been made as mentioned in subsection (1)(b) above on a petition presented after that date.
(5)References in this Act, in relation to a company in liquidation, to the beginning of the liquidation, are references—
(a)in a case falling within subsection (1)(a) above, to the passing of the resolution; and
(b)in a case falling within subsection (1)(b) above, to the making of the order.
Textual Amendments
F2Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14
F3Words in s. 5(1)(a) substituted (1.10.1991) by virtue of S.I. 1989/2405 (N.I. 19), art. 381(2), Sch. 9 para. 26; S.R. 1991/411, art.2
F4Words repealed (E.W.S.) by Insolvency Act 1985 (c. 65, SIF 66), s. 235(3), Sch. 10 Pt. II and Insolvency Act 1986 (c. 45, SIF 66), Sch. 11 para. 7
(1)This section applies to any policy which satisfies the requirements of any of the following, that is to say—
(a)section 1(4A)(d) of the M2Riding Establishments Act 1964 or any corresponding enactment for the time being in force in Northern Ireland;
(b)section 1 of the M3Employers’ Liability (Compulsory Insurance) Act 1969 or Article 5 of the M4Employers’ Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972; or
(c)[F6Part VI of the Road Traffic Act 1988]or [F7Part VIII of the Road Traffic (Northern Ireland) Order 1981];
and to any policy evidencing a contract of insurance effected for the purposes of section 19 of the M5Nuclear Installations Act 1965.
(2)This section applies to any security in respect of third-party risks given by an authorised insurance company which satisfies the requirements of [F6Part VI of the Road Traffic Act 1988]or [F7Part VIII of the Road Traffic (Northern Ireland) Order 1981].
(3)In this section “a liability subject to compulsory insurance” means any liability required under any of the enactments mentioned in subsection (1) above to be covered by insurance or (as the case may be) by insurance or by some other provision for securing its discharge.
(4)Subject to sections 9, 13 and 14 below and the following provisions of this section, it shall be the duty of the Board to secure that a sum equal to the full amount of any liability of a company in liquidation towards any policyholder or security holder under the terms of any policy or security to which this section applies is paid to the policyholder or security holder as soon as reasonably practicable after the beginning of the liquidation.
(5)Subsection (4) above does not apply by reference to any liability of a company in liquidation under the terms of a policy to which this section applies arising otherwise than in respect of a liability of the policyholder which is a liability subject to compulsory insurance.
(6)Subject to sections 9, 13 and 14 and subsection (8) below, it shall be the duty of the Board to secure that a sum equal to ninety per cent. of the amount of any liability of a company in liquidation towards a private policyholder under the terms of any policy to which this section applies, being a liability arising otherwise than in respect of a liability of the policyholder which is a liability subject to compulsory insurance, is paid to the policyholder as soon as reasonably practicable after the beginning of the liquidation.
(7)In subsection (6) above “private policyholder” means a policyholder who is either—
(a)an individual; or
(b)a partnership or other unincorporated body of persons all of whom are individuals.
(8)The duty of the Board under subsection (4) or (6) above shall not apply—
(a)in the case of any policy, unless it was a United Kingdom policy at the beginning of the liquidation; or
(b)in the case of any security in respect of third-party risks, unless it would have been a United Kingdom policy at the beginning of the liquidation if it had been an insurance policy and the contract governing the security had been a contract of insurance.
(9)References hereafter in this Act to policies which were United Kingdom policies at any time and to policyholders in respect of such policies shall be construed as including references to—
(a)securities to which this section applies which would have been United Kingdom policies at the time in question if they had been insurance policies and the contracts governing the securities had been contracts of insurance; and
(b)security holders in respect of such securities.
Textual Amendments
F6Words substituted by Road Traffic (Consequential Provisions) Act 1988 (c. 54, SIF 107:1), ss. 4, 5, Sch. 3 para. 14(1), Sch. 4 paras. 1, 2
F7Words substituted by S.I. 1981/160, art. 6(a)
Marginal Citations
Without prejudice to section 6 above, but subject to sections 9, 13 and 14 below, it shall be the duty of the Board to secure that a sum equal to the full amount of any liability of a company in liquidation in respect of a sum payable to a person entitled to the benefit of a judgment under—
(a)section 149 of the M6Road Traffic Act 1972 [F8or section 151 of the Road Traffic Act 1988] (duty of insurers to satisfy judgment against persons insured or secured against third-party risks); or
(b)[F9Article 98 of the Road Traffic (Northern Ireland) Order 1981] (court orders for recovery from insurers of sums due under unsatisfied judgments against persons insured or secured by them);
is paid to that person as soon as reasonably practicable after the beginning of the liquidation.
Textual Amendments
F8Words inserted by Road Traffic (Consequential Provisions) Act 1988 (c. 54, SIF 107:1), ss. 4, 5, Sch. 3 para. 14(2), Sch. 4 paras. 1, 2
F9Words substituted by S.I. 1981/160, art. 6(b)
Marginal Citations
(1)This section applies to any general policy other than a policy to which section 6 above applies.
(2)Subject to sections 9, 13 and 14 below, it shall be the duty of the Board to secure that a sum equal to ninety per cent. of the amount of any liability of a company in liquidation towards a private policyholder under the terms of any policy to which this section applies which was a United Kingdom policy at the beginning of the liquidation is paid to the policyholder as soon as reasonably practicable after the beginning of the liquidation.
(3)In subsection (2) above “private policyholder” has the same meaning as in section 6(6) above.
(4)In this Act “general policy” means any policy evidencing a contract the effecting of which constituted the carrying on of general business of any class, [F10other than class 5, 6, 7, 11 or 12, not being a contract of reinsurance].
Textual Amendments
F10Words substituted by Insurance Companies Act 1981 (c. 31, SIF 67), s. 36, Sch. 4 Pt. II para. 25(3)
(1)The Board shall not by virtue of any provision of sections 6 to 8 above be required to secure any sum for a policyholder in respect of a policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation or (as the case may be) for a person entitled to the benefit of a judgment by reference to any liability (or any part of any liability) of a company in liquidation which is duplicated by the liability of any other authorised insurance company which is not a company in liquidation.
(2)A liability of a company towards a policyholder is duplicated by the liability of another company for the purposes of subsection (1) above in so far as that other company is also under a liability, under the terms of any general policy which was a United Kingdom policy at the beginning of the first-mentioned company’s liquidation, to make any payment to or on behalf of the policyholder in respect of the matter to which the liability of the first-mentioned company relates.
(3)A liability of a company in respect of a sum payable under section 149 of the M7Road Traffic Act 1972 [F12section 151 of the Road Traffic Act 1988] or [F13Article 98 of the Road Traffic (Northern Ireland) Order 1981] to a person entitled to the benefit of a judgment is duplicated by the liability of another company for the purposes of subsection (1) above in so far as that other company is also liable under either [F14that section or that Article] to pay any sum to that person in respect of the same judgment.
Textual Amendments
F12Words inserted by Road Traffic (Consequential Provisions) Act 1988 (c. 54, SIF 107:1), ss. 4, 5, Sch. 3 para. 14(3), Sch. 4 paras. 1, 2
F13Words substituted by S.I. 1981/160, art. 6(c)(i)
F14Words substituted by S.I. 1981/160, art. 6(c)(ii)
Marginal Citations
(1)In this Act “long term policy” means any policy evidencing a contract the effecting of which constituted the carrying on of long term business. . . F15, not being a contract of reinsurance.
(2)Subject to sections 13 and 14 below, it shall be the duty of the Board to secure that a sum equal to ninety per cent. of the amount of any liability of a company in liquidation towards any policyholder under the terms of a long term policy which was a United Kingdom policy at the beginning of the liquidation is paid to the policyholder as soon as reasonably practicable after the beginning of the liquidation.
Textual Amendments
F15Words repealed by Insurance Companies Act 1981 (c. 31, SIF 67), s. 36, Sch. 5 Pt. I
Modifications etc. (not altering text)
C1S. 10 modified (24.9.1996) by 1996 c. 48, ss. 4(1)-(3), 8(3)
(1)Subject to subsection (2) below, in this section “future benefit”, in relation to any long term policy of a company in liquidation, means any benefit provided for under the policy which has not fallen due to be paid by the company before the beginning of the liquidation.
(2)Any bonus provided for under a policy shall not by virtue of subsection (1) above be treated as a future benefit within the meaning of this section unless it was declared before the beginning of the liquidation.
(3)Subject to sections 13 and 14 below and to the following provisions of this section, it shall be the duty of the Board, as soon as reasonably practicable after the beginning of the liquidation, to make arrangements in pursuance of subsection (5) below for securing continuity of insurance for every policyholder of a company in liquidation who is a policyholder in respect of a long term policy which was a United Kingdom policy at the beginning of the liquidation.
(4)Subject to subsection (6) below, the duty of the Board under subsection (3) above to secure continuity of insurance for any policyholder extends only to securing that the policyholder will receive ninety per cent. of any future benefit under his policy, subject to and in accordance with terms corresponding so far as appears to the Board to be reasonable in the circumstances to the terms which would have applied under the policy.
(5)For the purpose of securing continuity of insurance for any policyholders of a company in liquidation in accordance with subsection (3) above, the Board may take such measures as appear to them to be appropriate—
(a)for securing or facilitating the transfer of the long term business of the company, or of any part of that business, to another authorised insurance company; or
(b)for securing the issue by another authorised insurance company to the policyholders in question of policies in substitution for their existing policies.
(6)Where a long term policy of a company in liquidation contains terms relating to matters other than future benefits under the policy the duty of the Board under subsection (3) above to secure continuity of insurance for the policyholder in question extends also to securing that the policy after any transfer of business in which it is included or (as the case may be) any policy issued in substitution for the policy in question contains terms relating to those matters which correspond so far as appears to the Board to be reasonable in the circumstances to the terms first mentioned above.
(7)During any period while the Board are seeking to make arrangements for securing continuity of insurance for any policyholders of a company in liquidation in accordance with subsection (3) above, it shall be the duty of the Board, subject to sections 13 and 14 and subsection (11) below, to secure that ninety per cent. of any future benefit under a long term policy which would have fallen due to be paid to any of those policyholders during that period is paid to the policyholder in question as soon as reasonably practicable after the time when the benefit in question would have fallen due under the policy (but subject to and in accordance with any other terms which would have applied under the policy).
(8)Arrangements made by the Board in pursuance of subsection (5) above shall not be required to cover any future benefit under a policy in so far as any sums have been paid to the policyholder in pursuance of subsection (7) above by reference to that benefit.
(9)Where it appears to the Board that it is not reasonably practicable to secure continuity of insurance for any policyholder of a company in liquidation in accordance with subsection (3) above, it shall be the duty of the Board, subject to sections 13 and 14 and subsection (10) below, to pay to the policyholder a sum equal to ninety per cent. of the value attributed to his policy for the purposes of any claim in respect of his policy in the winding up of the company, as soon as reasonably practicable after any such claim is admitted.
(10)The [F16Treasury] may by regulations made by statutory instrument—
(a)require the Board, in a case to which subsection (9) above applies, to pay to the policyholder at his option, instead of the sum there mentioned, a sum equal to ninety per cent. of the value of the future benefits under his policy, or of such of those benefits as may be specified by the regulations, determined in such manner as the regulations may provide;
(b)make such provision as appears to [F17the Treasury] to be appropriate with respect to the time within which and the manner in which the Board are to perform any of their functions under this section (including any function conferred on them by virtue of paragraph (a) above).
(11)Any duty of the Board under subsection (3) or (7) above to take any measures for assisting a policyholder of a company in liquidation shall be subject to compliance on his part with any conditions imposed by the Board with respect to the payment, in any case or in any class or description of case, of sums which would have fallen due from policyholders of a company in liquidation by way of premiums under long term policies if the company had not gone into liquidation.
Textual Amendments
F16Words in s. 11(10) substituted (5.1.1998) by S.I. 1997/2781, arts. 2(1), 8(1), Sch. Pt. II para. 99 (with art. 7)
F17Words in s. 11(10)(b) substituted (5.1.1998) by S.I. 1997/2781, arts. 2(1), 8(1), Sch. Pt. II para. 100 (with art. 7)
Modifications etc. (not altering text)
C2S. 11 modified (24.9.1996) by 1996 c. 48, ss. 4(1)-(3), 8(3)
(1)If it appears to the Board, in the case of any long term policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation, that the benefits provided for thereunder are or may be excessive in any respect, having regard to the premiums paid or payable and to any other terms of the policy, the Board shall refer the policy to an independent actuary.
(2)This subsection applies in any case where an actuary to whom a policy is referred under subsection (1) above makes to the Board a report in writing—
(a)stating, with respect to any of the benefits provided for under the policy, that in his view the benefit or benefits in question are excessive; and
(b)recommending, accordingly, that for the purposes of sections 10 and 11 above any liability of the company under the policy or any future benefit under the policy should be treated as reduced or (as the case may be) disregarded.
(3)In any case to which subsection (2) above applies the Board may determine in the light of any recommendation contained in the actuary’s report that the liability or benefit to which that recommendation relates shall be treated as reduced or disregarded for the purposes of sections 10 and 11 above; and where the Board so determine the liability or benefit in question shall be treated as reduced or (as the case may be) disregarded accordingly for the purposes of the application of section 10, of any provision of subsections (3) to (7) of section 11, or of any provision of any regulations made under subsection (10) of section 11 above (as the case may require) in relation to the policy in question.
(4)This subsection applies in any case where—
(a)a claim has been admitted in the winding up of a company in respect of any policy which is the subject of a report by an actuary under subsection (2) above; and
(b)that report indicates, or the actuary makes to the Board a further report in writing indicating, what value would in his view have been attributed to the policy in the winding up if any future benefit under the policy to which any recommendation in the report under subsection (2) above relates had been treated as reduced or disregarded in accordance with the recommendation in determining the claim in respect of the policy in the winding up.
(5)In any case to which subsection (4) above applies the Board may determine in the light of the value indicated in the actuary’s report that the value attributed to the policy in question for the purposes of the claim in respect of the policy in the winding up shall be treated as reduced for the purpose of calculating the sum payable to the policyholder in accordance with subsection (9) of section 11 above; and where the Board so determine the value so attributed to the policy shall be treated as reduced for that purpose accordingly.
(6)In this section “future benefit” has the same meaning as in section 11 above.