.
“SCHEDULE 3ALAW APPLICABLE TO CERTAIN CONTRACTS OF INSURANCE
General rules as to applicable law
1.—(1) Where the policy holder has his habitual residence or central administration within the territory of the member State where the risk is situated, the law applicable to the contract is the law of that member State. However, where the law of that member State so allows, the parties may choose the law of another country.
(2) Where the policy holder does not have his habitual residence or central administration within the territory of the member State where the risk is situated, the parties to the contract may choose to apply either–
(a)the law of the member State where the risk is situated, or
(b)the law of the country in which the policy holder has his habitual residence or central administration.
(3) Where the policy holder carries on a business and the contract covers two or more risks relating to his business which are situated in different member States, the freedom of choice of the law applicable to the contract extends to the laws of those member States and of the country in which he has his habitual residence or central administration.
In this sub-paragraph "business" includes a trade or profession.
(4) Where the member States referred to in sub-paragraph (2) or (3) grant greater freedom of choice of the law applicable to the contract, the parties may take advantage of that freedom.
(5) Notwithstanding sub-paragraphs (1) to (3), when the risks covered by the contract are limited to events occurring in a member State other than the member State where the risk is situated, the parties may always choose the law of the former State.
(6) For risks classified under classes 4, 5, 6, 7, 11 and 12 of Part I of Schedule 2, the parties to the contract may choose any law.
Applicable law in the absence of choice
2.—(1) The choice referred to in paragraph 1 must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case.
(2) If that is not so, or if no choice has been made, the contract shall be governed by the law of the country (from amongst those considered in the relevant sub-paragraphs) with which it is most closely connected.
(3) Nevertheless, a severable part of the contract which has a closer connection with another country (from amongst those considered in the relevant sub-paragraphs) may by way of exception be governed by the law of that other country.
(4) A contract is rebuttably presumed to be most closely connected with the member State where the risk is situated.
Mandatory rules
3.—(1) The fact that in the cases referred to in paragraph 1 the parties have chosen a law does not, where all the other elements relevant to the situation at the time of the choice are connected with one member State only, prejudice the application of the mandatory rules of the law of that member State, which means the rules from which the law of that member State allows no derogation by means of a contract.
(2) Nothing in this Schedule restricts the application of the rules of a part of the United Kingdom in a situation where they are mandatory, irrespective of the law otherwise applicable to the contract.
Supplementary provisions
4.—(1) Where a member State includes several territorial units, each of which has its own rules of law concerning contractual obligations, each unit shall be considered as a country for the purposes of identifying the applicable law.
(2) The provisions of this Schedule apply to conflicts between the laws of the different parts of the United Kingdom.
5.—(1) Subject to the preceding provisions of this Schedule, a court in a part of the United Kingdom shall apply the general rules of private international law of that part of the United Kingdom concerning contractual obligations.
(2) In particular, reference shall be made to those rules–
(a)to ascertain for the purposes of paragraph 1(1) and (4) what freedom of choice the parties have under the law of a part of the United Kingdom; and
(b)to determine whether the mandatory rules of another member State should be applied in accordance with paragraph 3(1) where the law otherwise applicable is the law of a part of the United Kingdom.”
Information to be included in application for authorisation
7. In Schedule 5 to the Insurance Companies Regulations 1981 (information to be submitted: general business), in Parts I, II and III for paragraph 14 (information as to conditions and tariffs: exceptions) substitute–
“14. Notwithstanding paragraph 12 or 13 above, the general and special policy or treaty conditions which the company proposes to use and the tariffs which it proposes to apply for each category of business may be omitted–
(a)in the case of direct business, in relation to large risks, and
(b)in the case of reinsurance, in relation to general business class 4, 5, 6, 7, 8, 9, 11, 12, 13, 14, 15 or 16.”.
Grounds for exercise of supervisory powers
8.—(1) In section 11(2) of the Insurance Companies Act 1982() (withdrawal of authorisation in respect of new business: grounds), after paragraph (a) insert–
“(aa)that it appears to the Secretary of State that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another member State giving effect to the general insurance Directives;”.
(2) In section 37(2) of the Insurance Companies Act 1982 (powers of intervention: grounds for exercise), in paragraph (b) (failure to satisfy obligations) after sub-paragraph (i) insert–
“(ia)that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another member State giving effect to the general insurance Directives;”.
(3) In section 54(1) and (2) of the Insurance Companies Act 1982() (winding up on petition of Secretary of State under the Insolvency Act 1986 or corresponding Northern Ireland provisions), after paragraph (b) insert–
“(bb)that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another member State giving effect to the general insurance Directives;”.
Transfer of business
9.—(1) In section 51 of the Insurance Companies Act 1982 (approval of transfers of general business), after subsection (4) (conditions for approval) insert–
“(4A) Without prejudice to the generality of subsection (4) above, the Secretary of State shall not approve a transfer on an application under subsection (1) above to an insurance company whose head office is situated in another member State unless the supervisory authorities of that State certify that it possesses the necessary margin of solvency after taking the proposed transfer into account.
(4B) Notwithstanding the provisions of subsection (4)(a)(ii) and (b) above, the Secretary of State may approve a transfer on an application under subsection (1) above to an insurance company established in another member State, where he is satisfied that–
(a)the transfer relates to policies covering risks situated in the United Kingdom,
(b)the transferee is entitled in accordance with section 81B below to provide insurance in the United Kingdom in respect of those risks through that establishment, and
(c)the supervisory authorities of the member State of that establishment agree to the transfer.”.
(2) After section 52 of the Insurance Companies Act 1982 insert–
“Issue of certificates by Secretary of State.
52A.—(1) Where it is proposed to execute an instrument by which an insurance company established in another member State is to transfer to an insurance company whose head office is situated in the United Kingdom all its rights and obligations under such general policies, or general policies of such descriptions, as may be specified in the instrument, the Secretary of State may, if he is satisfied that the latter insurance company possesses the necessary margin of solvency after taking the proposed transfer into account, issue a certificate to that effect.
(2) In this section “general policy” means a policy evidencing a contract the effecting of which constituted the carrying on of general business, other than reinsurance.”.
Provision of insurance from another member State
10. In the Insurance Companies Act 1982, after Part III insert–
“PART IIIAPROVISION OF INSURANCE FROM ANOTHER MEMBER STATE
Introduction
Introductory provisions.
81A.—(1) References in this Part to the provision of insurance in a member State are to the covering of a risk situated there through an establishment in another member State.
(2) The member State in which the establishment is situated is referred to as the “member State of establishment”.
(3) In this Part–
(a)references to an insurance company are to a company which has been authorised in accordance with Article 6 of the first general insurance Directive; and
(b)references to the covering of a risk are to the covering (otherwise than by way of reinsurance) of a risk to which this Part applies.
(4) This Part applies to risks falling within Schedule 2 to this Act (general business), other than–
class 1, so far as it relates to accidents at work;
class 10, except for carrier’s liability;
class 12, so far as it relates to motorboats and boats where in the member State in which the risk is situated the insurance of motorboats and boats was on 30th June 1988 subject to the same requirements as land motor vehicles;
class 13, so far as it relates to nuclear civil liability and pharmaceutical product liability;
classes 9 and 13, so far as they relate to the compulsory insurance of building works.
(5) An insurance company shall not be regarded for the purposes of Parts I and II of this Act as carrying on insurance business in the United Kingdom by reason only of the fact that it provides insurance in the United Kingdom.
Provision of insurance in the United Kingdom
Documents to be furnished to the Secretary of State.
81B.—(1) An insurance company which intends to provide insur ance in the United Kingdom shall send to the Secretary of State–
(a)a certificate issued by the competent authorities of the member State in which the company’s head office is situated attesting–
(i)that the company possesses for its activities as a whole the minimum solvency margin calculated in accordance with Articles 16 and 17 of the first general insurance Directive, and
(ii)that the company’s authorisation in accordance with Article 7(1) of that Directive enables the company to operate outside its member State of establishment,
(b)a certificate issued by the competent authorities of the member State of the establishment through which the company intends to provide insurance in the United Kingdom, which–
(i)indicates the classes of insurance business which the company has been authorised to undertake through that establishment, and
(ii)states that the authorities do not object to the company providing insurance in the United Kingdom,
(c)a statement by the company of the nature of the risks which it proposes to cover in the United Kingdom, and
(d)a notice stating the address of the company for the purpose of the service of documents under this Part;
and the company shall not provide insurance in the United Kingdom before the date certified as that on which those documents were received by the Secretary of State.
(2) Where an insurance company wishes to provide insurance in the United Kingdom in respect of risks other than those mentioned in the statement given in accordance with subsection (1)(c), it shall give written notice to the Secretary of State amending that statement; and it shall not provide insurance in the United Kingdom in respect of such risks before the date certified as that on which written notice of the amendment was received by the Secretary of State.
Information to be given to policy holder.
81C.—(1) Before entering into a contract for the provision of insurance in the United Kingdom, the insurance company shall inform the policy holder of the member State in which the establishment is situated through which the risk is to be covered; and any document issued to the policy holder by the company shall also contain that information.
The requirements of this subsection do not apply where the contract is for the coverage of large risks only.
(2) An insurance company providing insurance in the United Kingdom shall ensure that–
(a)the address of the establishment through which the risk is or is to be covered, and
(b)the address of the company’s head office,
are stated on any policy or other document under the terms of which insurance is granted, and on the insurance proposal if statements in the proposal bind the proposer.
Powers of intervention.
81D.—(1) Where it appears to the Secretary of State that an insurance company providing insurance in the United Kingdom has failed to comply with any provision of this Act, he may require it to take such steps as he may specify to comply with that provision.
(2) If the company fails to comply with a requirement under subsection (1), the Secretary of State shall notify the competent authorities of the member State of establishment.
(3) If such a company persists in contravening a provision of this Act which has been the subject of a requirement under subsection (1), the Secretary of State may, after informing the competent authorities of the member State of establishment, direct the company to cease to provide insurance, or insurance of any specified description, in the United Kingdom.
(4) After giving such a direction, the Secretary of State shall by notice in writing inform the company of his reasons for doing so.
(5) A direction under this section does not prevent the company from effecting a contract of insurance in pursuance of a term of a subsisting contract of insurance.
(6) A requirement or direction under this section may be varied or revoked by the Secretary of State.
Power to require information.
81E. The Secretary of State may, for the purpose of facilitating the exercise by him of his functions under section 81D, require an insurance company providing insurance in the United Kingdom to furnish him, at specified times or intervals, with information about such matters as he may specify being, if he so requires, information verified in a specified manner.
Withdrawal of authorisation.
81F.—(1) Where an insurance company is providing insurance in the United Kingdom and the Secretary of State is notified by the competent authorities of the member State of establishment, or of the company’s head office, that the authorisation of the company has been withdrawn in accordance with Article 22 of the first general insurance Directive, he may direct the company to cease to provide insurance, or insurance of any specified description, in the United Kingdom through all, or any specified, establishments.
(2) After giving such a direction, the Secretary of State shall by notice in writing inform the company of his reasons for doing so.
(3) A direction under this section does not prevent the company from effecting a contract of insurance in pursuance of a term of a subsisting contract of insurance.
Provision of insurance in another member State
Notification to Secretary of State.
81G.—(1) Where an insurance company intends to provide insur ance in a member State other than the United Kingdom and–
(a)its head office is situated in the United Kingdom, or
(b)the insurance is to be provided through an establishment in the United Kingdom,
it shall before doing so notify the Secretary of State of its intention.
(2) The notification shall indicate–
(a)the member State in which the insurance is to be provided,
(b)the nature of the risks which the company proposes to cover, and
(c)where the company’s head office is situated in the United Kingdom, the member State in which the establishment through which the risks will be covered is situated.
(3) Where the company intends to provide insurance in more than one member State, the information specified above may be contained in a single notification but must be set out separately in relation to each member State.
(4) Where a company has duly notified the Secretary of State of its intention to provide insurance in another member State where administrative authorisation is required for the provision of insur ance, then, if the original notification related–
(a)only to risks in respect of which such authorisation is required, or
(b)only to risks in respect of which such authorisation is not required,
and the company subsequently intends to extend its activities to risks falling within the other category, it shall before doing so comply with subsections (1) to (3) above in relation to those risks.
Issue of certificates by Secretary of State.
81H.—(1) An insurance company whose head office is situated in the United Kingdom and which intends to provide insurance in another member State may apply to the Secretary of State for a certificate attesting–
(a)that the company possesses for its activities as a whole the minimum solvency margin calculated in accordance with Articles 16 and 17 of the first general insurance Directive, and
(b)that the company’s authorisation to carry on business in the United Kingdom, issued in accordance with Article 7(1) of that Directive, enables the company to operate outside the member State of establishment.
(2) An insurance company which intends to provide insurance in another member State through an establishment in the United Kingdom may apply to the Secretary of State for a certificate–
(a)indicating the classes of insurance business which the company has been authorised to carry on in the United Kingdom, and
(b)stating that the Secretary of State does not object to the company providing the insurance.
(3) If it appears to the Secretary of State that a certificate applied for under subsection (1) or (2) ought to be issued, he shall issue the certificate accordingly.
(4) If the Secretary of State refuses to issue a certificate, he shall inform the company in writing of his decision and of the reasons for it.
Provisions as to transfer of business.
81I.—(1) The Secretary of State shall not approve a transfer on an application under section 51(1) above (transfer of general business to another company in the United Kingdom) relating to policies written by way of provision of insurance in another member State unless–
(a)the transferee fulfils the conditions in Articles 13 to 16 of the second general insurance Directive in the member State where the risk is situated, and
(b)the supervisory authorities of that member State agree to the transfer.
(2) The Secretary of State may approve a transfer on an application under section 51(1) above notwithstanding the provisions of para graphs (a)(ii) and (b) of subsection (4) of that section (which require the transferee to be carrying on insurance business in the United Kingdom and to be authorised under section 3 or 4 above) where he is satisfied that–
(a)the transfer relates to policies covering risks situated in another member State,
(b)the transferee is an insurance company established in another member State and the supervisory authorities of that member State agree to the transfer, and
(c)where the risk is not situated in the transferee’s member State of establishment–
(i)the transferee fulfils the conditions in Articles 13 to 16 of the second general insurance Directive in the member State where the risk is situated,
(ii)the law of that member State provides for the possibility of such a transfer, and
(iii)the supervisory authorities of that member State agree to the transfer.
(3) An instrument giving effect to any such transfer as is mentioned in subsection (1) or (2) above shall not bind a policy holder whose policy is included in the instrument unless notice of the execution of the instrument has been published, in a manner directed by the Secretary of State, in the member State in which the risk is situated.
Supplementary provisions
Offences under Part IIIA.
81J.—(1) An insurance company commits an offence if it–
(a)provides insurance in the United Kingdom in contravention of section 81B, or
(b)makes default in complying with, or with a requirement imposed under, any other provision of this Part.
(2) A person commits an offence if–
(a)in purported compliance with a requirement under section 81E he furnishes information which he knows to be false in a material particular or recklessly furnishes information which is false in a material particular, or
(b)he causes or permits to be included in–
(i)a document required by section 81B to be sent to the Secretary of State, or
(ii)a notification sent to the Secretary of State under section 81G,
a statement which he knows to be false in a material particular or recklessly causes or permits to be so included a statement which is false in a material particular.
(3) A person committing an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.”.
Additional information on provision of insurance in another member State
11.—(1) In the Insurance Companies (Accounts and Statements) Regulations 1983, after regulation 13 insert–
“Additional information on general business (provision of insurance in another member State)
13A.—(1) Every company which provides insurance in another member State (within the meaning of Part IIIA of the Act) through an establishment in the United Kingdom shall prepare in respect of those operations Form EC(P) (analysis of gross premiums receivable by groups of classes) in accordance with the requirements of Schedule 2A below.
(2) Where in any financial year the gross premiums so earned in a member State by an establishment in the United Kingdom exceed 2,500,000 ECU, the company shall also prepare an underwriting account in Form EC(A) or Form EC(B) as set out in Schedule 2A below (or both if appropriate).
(3) The forms mentioned in paragraphs (1) and (2) above shall be prepared separately in respect of each member State in which the company provides the insurance.
(4) Where in any financial year a company provides insurance in another member State through an establishment in the United Kingdom and the conditions specified in paragraph (5) below are met, the Secretary of State may by notice in writing direct the company in future to prepare an underwriting account in Form EC(A) or Form EC(B) as set out in Schedule 2A below (or both if appropriate) in respect of the provision of insurance in that member State through its establishment in the United Kingdom.
(5) The conditions referred to in paragraph (4) above are that–
(a)in that financial year the company earned through all its establishments (in the United Kingdom and elsewhere) gross premiums in excess of 2,500,000 ECU in respect of the provision of insurance in the member State concerned, and
(b)the supervisory authorities of the member State in which insurance is provided or, if the head office of the company is situated in a member State other than the United Kingdom, the supervisory authorities of that member State, ask the Secretary of State that an underwriting account be kept by the company’s establishment in the United Kingdom for the operations effected in the member State where the insurance is provided.”.
(2) After Schedule 2 to the Insurance Companies (Accounts and Statements) Regulations 1983, insert Schedule 2A as set out in the Schedule to these Regulations.
Community co-insurance
12. In Schedule 9 to the Insurance Companies Regulations 1981 (relevant co-insurance operations), in paragraph 2 (relevant classes of general business), after the entry relating to class 13 insert–
“class 14 (credit),
class 15 (suretyship),”.
Regulation 11
SCHEDULE[SCHEDULE 2A TO THE INSURANCE COMPANIES (ACCOUNTS AND STATEMENTS) REGULATIONS 1983]
GENERAL BUSINESS: ANALYSIS OF GROSS PREMIUMS AND UNDERWRITING ACCOUNT
John Redwood
Parliamentary Under-Secretary of State,
Department of Trade and Industry
30th June 1990