Our analysis of key legal developments in the insurance industry over recent months.
In this edition of Insurance focus, Noleen John considers the FSA ’s recent changes to the rules on the use of the with-profits funds of proprietary firms for payments for compensation and redress.
Maria Ross and Caroline Riddy ask what UK firms should be doing to meet the Solvency II requirements for outsourcing.
From our tax department, Dominic Stuttaford and Kate Denholm examine the significance of the recent InsuranceWide decision on VAT and internet comparison and introduction websites.
In our regular case notes section we examine the landmark House of Lords decision in Wasa v Lexington  UKHL 40 and the recent Court of Appeal judgment in Youell v La Reunion Aerienne  EWCA Civ 175.
We also include a number of legal updates from our international offices.
Back to top
New regime for with-profits funds
The Financial Services Authority (FSA) has recently published new rules for the with-profits funds of proprietary firms which will mean that, from August 2009, liabilities arising from operational failures must be borne by shareholders, not policyholders. Noleen John considers how the FSA has approached the issue of who should take responsibility for compensation and redress.
In February 2009, the Financial Services Authority (FSA) published a consultation paper (CP09/9) on proposals to prohibit compensation and redress payments (arising out of operational failures, including mis-selling) out of any part of a proprietary insurer’s with-profits fund. The FSA has decided to implement the changes proposed in CP09/9 having taken into consideration the views of a wide range of respondents.
The new rules
In its policy statement on the new rules (PS09/13) the FSA states that “the final rules are unlikely to be welcomed by all interested stakeholders” but that the rules will result in “fairer treatment of with profits policyholders”.
The new rules, which came into force on 31 July, make the following changes:
- Proprietary firms will not be able to charge payments for compensation and redress to their with-profits fund where such payments arise from events which occur after 31 July 2009 (except from assets in the fund which are attributable to shareholders).
- The rules will not affect the current requirements relating to the provision, identification and valuation of liabilities in with-profits funds. Where appropriate, firms will continue to be required to make provision in their with-profits funds for any liability to make compensation and redress payments to policyholders of that fund.
- The rules will not apply to ‘rectification payments’, i.e. where both policyholders and the fund are put back into the position that would have existed had an error (such as an overpayment of premium) not occurred.
The FSA first consulted on proposals to change the rules for the charging of the costs of compensation and redress in June 2008 in CP08/11. In February 2009, the FSA published a further consultation (CP09/9) which amended their proposed rule changes so as to apply only to compensation and redress payments resulting from events which take place after the new rules come into force.
In CP09/9 the FSA confirmed its previously stated position that it is necessary, in order to treat with-profits customers of proprietary companies fairly, for policyholder compensation and redress payments to be paid from shareholders’ funds, rather than from the with-profits fund. Proprietary companies in this case will include funds which distribute on a 100:0 basis. Mutuals are not included in the proposals.
The basic premise behind the consultation was that policyholders have a legitimate interest in potential surplus distributions from a with-profits fund. That contingent interest requires that the fund is not unfairly eroded by payments which result from the way the business is operated or failures in its systems and controls. This concept was controversial for those in the life industry as part of the traditional concept of with-profits investment is to share in business profits and losses. However, it would seem that the FSA did not accept that substantial payments of compensation can be characterised as normal business expenditure which might go into the calculation of miscellaneous profits/loss. It therefore considered it to be unfair to allow policyholders’ contingent interest in surplus to be reduced to cover mis-selling costs.
The FSA’s reasoning
CP09/9 was particularly useful in that it shed light, not just on the FSA’s thinking on compensation, but also on some other more wide ranging issues in relation to the fair treatment of with-profits policyholders. One of the issues raised in response to both consultations concerned the FSA’s ability to make rules on “Treating Customers Fairly” grounds which might be seen to cut across the contractual provisions of a with-profits policy. The FSA’s response made the point that its powers under the Financial Services and Markets Act 2000 are wide, and enable it to make rules which appear to be “necessary or expedient for the purpose of protecting the interests of consumers” (found in Annex I of CP09/9).
Another issue raised by the consultation was a challenge to the concept that policyholders can have an interest beyond their asset shares. The FSA makes clear that if a fund were to close, any surplus would be distributed over time and therefore policyholders have a contingent interest in it. Similarly, if there were to be a reattribution, policyholders would be asked to give up their rights to any potential surplus, normally in return for some other benefit.
CP09/9 was also illuminating in relation to the effect of statements in Principles and Practices of Financial Management (PPFMs) and the consumer versions of such documents. The FSA stated that disclosure in a PPFM is a factor to be taken into account in assessing the fairness of a firm’s actions, but such action is not automatically fair by reason of disclosure in the PPFM. Statements in PPFMs, unlike obligations in court approved schemes, are also subject to future regulatory changes.
The final point of interest from these consultations is that the FSA states that it will publish a document detailing its thoughts on lessons learned from reattributions later this year, including presumably its thoughts on shareholder tax, another thorny issue for with-profits funds.
For further information contact:
Noleen John is an insurance lawyer based in London. She is a consultant in our corporate insurance team.
Back to top
Outsourcing by UK (re)insurers: are you ready for Solvency II?
The Solvency II Directive has now been agreed between the European Parliament and Council, and its formal adoption awaits only the translation and verification of the directive text. The implementation date of October 2012 is confirmed, making it essential for the (re)insurance industry to engage fully in preparing for the new regime. For UK firms, the impact of Solvency II on their outsourcing arrangements may not be as radical as for some European counterparts. Maria Ross and Caroline Riddy consider firms’ obligations under the new regime.
In March this year the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) published a Consultation Paper containing draft advice on Level 2 implementing measures for Solvency II’s Systems of Governance requirements which included how firms should manage their outsourcing.
Outsourcing under Solvency II
Article 38 of the Solvency II framework directive text deals with the supervision of firms’ outsourced functions and activities. In essence, (re)insurers must ensure that various conditions are satisfied before any functions or activities are outsourced. They must ensure that the service provider will cooperate with the FSA ; that the FSA and auditors will have access to relevant data; and that the FSA will have access to the business premises of the outsource provider and will be able to exercise those rights of access to carry out on-site inspections.
Article 41(3) sets out general governance requirements, and provides that firms must have written policies in relation to outsourcing, and ensure that those policies are implemented. Such policies must be reviewed at least annually, subject to prior approval by management, and must be adapted in view of any significant change in the system or area concerned. CEIOPS’s view, and one which firms should begin implementing, is that policies on outsourcing should clearly set out the relevant responsibilities, goals, processes and reporting procedures to be applied, all of which should be in line with overall business strategy.
Article 48(1) makes it clear that, as is currently the case in the UK, firms remain fully responsible for their outsourced obligations. With this in mind, CEIOPS recommends that firms maintain in-house the competence and ability to assess whether the service provider delivers according to contract.
Article 48(2) imposes additional requirements in relation to the outsourcing of “critical or important” operational functions or activities. CEIOPS believes that these include all functions within the firm that are fundamental to carrying out its core business, for example the pricing and design of insurance products; and claims handling.
Due diligence on a proposed service provider will continue to be key, including carrying out a detailed examination of its ability and capacity to deliver the functions/activities required. Even in relation to an intra-group arrangement, a written agreement should be entered into which has been authorised by management and which includes terms in relation to duties and responsibilities; commitments to comply with all applicable laws and regulatory requirements; termination being on sufficient notice to allow the firm to find an alternative service provider; dispute resolution; co-operation with the FSA; access to data and premises; and sub-outsourcing.
Note that the Directive text makes no distinction between internal and external outsourcing, although in its feedback statement of 19 May 2009, CEIOPS has commented on circumstances which may result in some relief to reflect the lower risk of intra-group outsourcing. Nor does the text make any distinction between outsourcing inside or outside the EU .
As should currently be the case, pursuant to Article 48(3), firms should notify the FSA prior to the outsourcing of critical or important functions or activities (CEIOPS suggests that six weeks’ prior notice is appropriate), as well as of any subsequent material developments with respect to those activities.
In contrast to the current position, Solvency II will require every insurance firm to have an internal audit function, the day-to-day operation of which can be outsourced. Firms will need to have sufficiently skilled personnel in-house to oversee and challenge the work of any organisation to which internal audit functions are outsourced. The same principle applies in relation to the outsourcing of elements of the internal model.
How should insurers get ready?
Although UK firms are already closely supervised in relation to the functions and activities which they outsource, Solvency II goes further, and its impact on firms in some EU member states is likely to be particularly keenly felt.
Firms should start looking at their service contracts (both with third parties and intra-group) in order to determine whether they could constitute “outsourcing” for the purpose of Solvency II and, if so, whether any re-negotiation is required. All standard form outsourcing contracts should be revised, as appropriate, to ensure that they will meet the new rules. Senior management should be fully apprised of their responsibility for their firm’s outsourcing arrangements.
2012 may seem a way off, but it is crucial for firms to start engaging with Solvency II now.
For further information contact:
Maria Ross, Partner
Maria Ross is a corporate finance lawyer based in London. Maria practices exclusively in the financial services sector, and the insurance sector in particular.
Caroline Riddy, Associate
Caroline Riddy is a corporate insurance lawyer based in our London office.
This article was first published by Complinet.
Back to top
Internet comparison and introduction services are a burgeoning outlet for the insurance industry. The types of services provided and interactions between suppliers and insurers quickly adapt as technology is enhanced and developed. The value added tax (VAT) regime has at times struggled to keep up. Dominic Stuttaford and Kate Denholm consider the latest developments in the ongoing InsuranceWide matter.
One question taxing HM Revenue and Customs (HMRC) recently has been whether the VAT exemption that has traditionally applied to brokerage fees should equally apply to payments to the providers of an internet platform. If such an exemption did not apply, any VAT would be likely to be an absolute cost for the insurer. Against this background, the High Court has decided that internet introduction services which channel potential customers to insurers and for which the supplier receives commission when contracts of insurance are concluded, are exempt from VAT. The UK and EU legislation on which the decision is based was unlikely, when it was drafted, to have contemplated the relationships which now exist but the court was able nonetheless to interpret the VAT exemption to cover these unforeseen circumstances.
InsuranceWide – the facts
The law on the exemption can be stated briefly. Under UK law, the provision by an insurance broker or insurance agent of the services of an insurance intermediary is exempt for VAT purposes if those services relate to an insurance transaction or are provided in the course of acting as an intermediary (Item 4, Group 2 of Schedule 9, Value Added Tax Act 1994). Note 1 Group 2 of Schedule 9 lists the services of an insurance intermediary as including the bringing together with a view to insuring risks of persons seeking and persons providing insurance and the carrying out of work preparatory to the conclusion of contracts of insurance. Article 13B of the Sixth VAT Directive (77/388/ EEC ) states that insurance transactions, including related services performed by insurance brokers and insurance agents, are exempt from VAT.
The latest decision in this area concerned two appeals. The first was an appeal by InsuranceWide.com Services Limited (InsuranceWide) against a decision of the VAT and Duties Tribunal that certain of its services were subject to VAT. The second was an appeal by HMRC against a decision of the tribunal that Trader Media Group Limited’s (Trader Media) supplies of services were exempt.
The facts in each case were relatively similar but, illustrating some of the difficulties in this area, it was noteworthy that the tribunals concerned came to different conclusions. The Trader Media business, Auto Trader, operates a website which advertises used cars and which also, for a period, hosted advertisements for insurance brokers. Prospects would browse the Auto Trader website which contained an ‘insurance centre’ section from which they were invited to get a quote for insurance. If they decided to ‘get a quote’, customers would click-through to the comparethemarket.com website operated by an existing insurance broker, BISL.
If a customer wished to purchase insurance, he would then click onto the weblink of the company that best met his requirements. Trader Media had an agreement with BISL pursuant to which Trader Media would receive commission on any contract concluded via the Auto Trader website.
InsuranceWide’s service is slightly more akin to that of the service provided by BISL than that provided by Trader Media; InsuranceWide customers could get a quote for insurance on the InsuranceWide website itself. From there, a customer was able to “click-through” to the insurer’s website to complete a transaction.
In the InsuranceWide tribunal decision, it had been held that an insurance agent must be able to bind the insurer for the services to be exempt, and that an insurance intermediary must do more than merely introduce.
The Trader Media tribunal directly contradicted this by a statement that an introducer was part of the chain between the customer and insurer and therefore could be an agent or broker for VAT purposes. The High Court stated that both appeals raised the question of whether, if the taxpayer was “merely introducing” the services, it would be exempt from VAT.
The taxpayers proposed that mere introduction would suffice, while HMRC submitted that the fact that introducers did not have the power to bind an insurance company was a strong indication that introducers were not insurance agents. It was also a requirement of the exemption that an agent or broker should play a part in the negotiation of the terms of the insurance contracts.
The judge dismissed HMRC’s contentions and held that the introduction services were exempt from VAT. He started by considering that for the purposes of Article 13B there was no difference between insurance brokers or agents and that brokers and intermediaries were interchangeable – the key issue in application of the exemption being what the supplier of services was actually doing.
He went on to define what was meant by an introducer. In the context of the relevant facts, an introducer was someone who was able to put two or more individuals in contact with each other with a view to their forming, in the future, a commercial relationship. He distinguished between introducers – whom he felt brought together insurers and insureds, and negotiators – whom he believed carried out work preparatory to the conclusion of insurance contracts, but who were both within the exemption. He then made a distinction between introducers and advertisers (whose services are subject to VAT); the former, he stated, did much more than advertise and needed to have a relationship with both the insurer and insured. However this did not need to necessarily be a direct relationship. In each case, whether a person was an introducer or an advertiser would depend upon the specific facts. Insurance ‘related services’ did not have to be performed entirely by one person but could be performed by one or more individuals in a chain. Finally, he also considered it irrelevant that a supplier was not regulated by the Financial Services Authority.
This judgment will clearly be welcomed by the taxpayers concerned. It will also ease any residual concerns of competitors providing similar services who have been following the case, even if their services were not currently considered to be subject to VAT. Victory for HMRC might have encouraged them to look again at the treatment of such firms. HMRC may (perhaps rightly) argue that all the court is doing is seeking to ensure that there are no hidden VAT costs in concluding an insurance contract, and that internet providers have in effect stepped into the shoes of the traditional insurance broker or agent.
From HMRC’s perspective, the High Court’s verdict will be unwelcome in its conclusions (both generally and specifically) that the power to bind a person is not a prerequisite to VAT exemption. It may be that HMRC decide to appeal the decision. If they do, a higher court may reach a different conclusion, which would leave the general position unclear.
In any event, a new insurance exemption is due to come into force on 1 January 2010 with wording which appears no less ambiguous in relation to the position of such internet services - and indeed, given the pace of change in the sort of services available, this is not unexpected given the inevitable time lag between legislative proposals and enactments. As well as looking back, service providers will therefore also need to start considering their position going forward, under the new European legislation.
For further information contact:
Dominic Stuttaford, Partner
Dominic Stuttaford is a tax lawyer based in London. He specialises in the tax aspects of corporate finance and other finance transactions and structures, with a particular interest in the insurance sector.
Kate Denholm, Associate
Kate Denholm is a tax lawyer based in London.
Back to top
Youell v La Reunion Aerienne  EWCA Civ 175
In Youell the Court of Appeal has affirmed that the inclusion of an arbitration clause in an insurance policy will not prevent the application of the Brussels I Regulation in relation to a peripheral dispute.
This was an appeal from a decision in October 2008 of Tomlinson J, who had rejected a challenge by the defendants (French market insurers) to the jurisdiction of the English court to give a declaration of non-liability. The French market had maintained that under Council Regulation 44/2001/ EC on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation), the claim was outside the jurisdiction of the English court as the contract upon which the claim relied was subject to an arbitration agreement.
The insured under the relevant insurance programme, which had both French and London market participants, was a French aeronautical engineering company. In 1993 a third party suffered serious injuries in a helicopter crash. The injured party claimed that the accident was the result of the insured’s defective helicopter engines. The underlying claim was settled in 1995 but further proceedings were issued in 2000 when the third party alleged that the settlement had been induced by a fraudulent misrepresentation. In 2007 this later action was settled by the French market. The French market maintained that under a co-insurance agreement the London market was liable to indemnify the French market for a proportionate share ( US$ 2,450,000) of the disputed settlement.
It was the London market’s position that the settlement had been made without their consent and that, further, liability in respect of an alleged fraudulent misrepresentation was not covered by the policy.
The French market began an arbitration in Paris in accordance with an arbitration clause in the French policy. The London market responded by issuing proceedings in England for a declaration that it was not liable to indemnify the French market and denied that it was subject to any agreement to arbitrate. The London market maintained that, in accordance with Article 5(1)(a) of the Brussels I Regulation, any hearing should be heard in the “place of performance of the obligation in question” as the matter concerned a contract. In this instance that place would be London.
The French market argued that the Brussels I Regulation did not apply because of the exclusion under Article 1(2)(d) for arbitration.
At first instance, Tomlinson J held that there was indeed a contractual relationship and that Article 5(1)(a) therefore applied. Further, the French defendants’ argument in relation to Article 1(2)(d) of the Brussels I Regulation failed on the grounds that the application of the regulation should not be excluded merely because the contract contained an arbitration clause.
Lords Justices Rix, Jacob and Lawrence Collins dismissed the appeal. The fact that the claim in question was subject to an agreement to arbitrate could not deprive the court of its jurisdiction under the Brussels I Regulation to determine the dispute.
The decision of the Court of Appeal confirms the position taken by the European Court of Justice in Allianz SpA v West Tankers Inc (Case C-185/07) that a legal relationship does not fall outside the scope of the Brussels I Regulation simply because the parties have entered into an arbitration agreement.
Further, the Court of Appeal rejected the argument put forward by the French market that the principle in Boss Group Limited v Boss France SA  1 WLR 351 (AC) should be applied. In Boss Group an application for negative declaratory relief had been based upon a mirror image of the main claim against which relief was sought. The French market in Youell had argued that the claim in England should be considered a mirror image of the arbitration claim in France and thus subject to the arbitration exclusion. This was not the case, however, according to the Court of Appeal. There was no basis for the application of Boss Group in this instance as the claim by the French market was a debt claim for an indemnity arising from an alleged mandate given by the London market to the French market. The mere fact that the claims of the London market were the mirror image of claims which were being asserted by the French markets in the French arbitration did not make them claims to which the exclusion applied. The London market had not distorted the nature of the French market’s claim. At best the reliance of the French market on the arbitration agreement was merely incidentally raised in the English proceedings. The rights which the London market sought to protect were the rights not to be sued on a claim which was denied. It did not matter that the French market pursued that claim in arbitration.
Furthermore, the Court of Appeal stated that the correct course of action where a party believes that proceedings have been started in breach of an agreement to arbitrate is to apply for the proceedings to be stayed under the Arbitration Act 1996 (or under the New York Convention outside England and Wales).
For further information on this case, please contact Susan Dingwall or Michael Mendelowitz.
Wasa v Lexington  UKHL 40
In a decision that brings “back-to-back” back to basics, the House of Lords has held that no amount of follow the settlements language in a reinsurance contract will make reinsurers liable for risks that, on the true construction of the reinsurance policy, would not otherwise be covered by it. Yasmin Lilley examines this recent decision by the House of Lords.
The dispute in Wasa v Lexington began with an order to US aluminium manufacturer, Alcoa, to clean up over 40 years’ worth of pollution at various sites across America. Despite being on risk for a three-year period only, property damage insurer Lexington was held by the Supreme Court of Washington, applying Pennsylvanian law, to be liable for the full extent of Alcoa’s clean-up costs at any particular site so long as at least some of the damage had occurred at that site during the period of cover. Lexington sought to recover from its reinsurers, including Wasa, in England, under a reinsurance contract which to all intents and purposes was back-to-back with the underlying policy, containing a full reinsurance clause, follow the settlements language and a 36-month period clause spanning the same term as the three-year period clause in the underlying contract. The only crucial difference between the policies was that the insurance was held to be governed by Pennsylvanian law, while the reinsurance was governed by English law.
At first instance, it was held that Wasa was not liable for damage which had occurred outside the 36-month period that it was on risk. The Court of Appeal disagreed, and ruled that the parties must have intended the cover to be back-to-back, so that the period clause in the reinsurance contract should be construed in the same way as the period clause in the underlying policy.
Unanimously overturning the Court of Appeal decision, the House of Lords held that a reinsurance policy is a separate contract, and that what falls within its cover is a question of construction of that contract, applying the law governing it. In this case the 36-month period clause in the reinsurance contract meant what it said under English law, and could not be construed to mean over 40 years in the same way as the three-year period clause in the underlying contract had been interpreted under Pennsylvanian law.
In order, therefore, for reinsureds to ensure that their reinsurance cover is fully back-to-back with the underlying contract, the insurance and reinsurance policies should either be made subject to one and the same governing law, or agreement should be reached that reinsurers will indemnify their reinsureds in respect of any liability sustained under the primary cover – regardless of the terms of the reinsurance contract. A word of caution, however, for reinsurers: the House of Lords indicated that where the governing law of the insurance is expressly set out in the underlying policy (unlike in this case), so that it would in theory be possible for reinsurers, taking appropriate foreign legal advice, to determine their potential exposure under back-to-back reinsurance contracts from the outset, then (in the absence of express words to the contrary) there is a greater possibility of the meaning of the underlying policy being translated into the reinsurance contract.
For further information contact Yasmin Lilley.
Back to top
VAT on reinsurance portfolio transfers under the spotlight
The European Court of Justice (ECJ) has been asked to define certain aspects of the VAT system applicable to insurance transactions following a series of questions referred to the Court by the Bundesfinanzhof – Germany’s supreme fiscal court – for a preliminary ruling (Case C-242/08).
In particular, the ECJ was asked to determine whether a transfer of insurance contracts from one insurer to another may be regarded, for tax purposes, as an ‘insurance transaction’ under the VAT rules. Transfers of insurance business are usually regarded in both Germany and the UK as transfers of a going concern and thus outside the scope of VAT.
In May this year Advocate General Mengozzi gave an opinion on this issue which is likely to result in transfers of reinsurance portfolios being subject to VAT in the future.
The Advocate General concluded the following:
- The transfer of reinsurance contracts would not qualify as an exempt insurance or reinsurance transaction under the VAT Directive.
- The transfer of reinsurance contracts was a supply of services and thus subject to VAT.
As the application of VAT is based upon the Sixth VAT Directive (Council Directive 77/388/ EEC ) the ruling by the ECJ, which is due shortly and is expected to follow the opinion by the Advocate General, will have an effect on all transfers of reinsurance portfolios throughout the European Community.
A ruling following the Advocate General’s findings would have the following implications:
- The transfer of reinsurance portfolios will be subject to VAT.
- As long as the purchaser only performs VAT-exempt (re)insurance services, the purchaser should not be entitled to deduct input VAT.
- Accordingly, the purchase price for a reinsurance portfolio could effectively increase by the applicable VAT rate.
The issue was raised with the European Court of Justice by the Munich tax office and a German affiliate of Swiss Re. The proceeding relates to a transfer of 195 reinsurance contracts by the German affiliate of Swiss Re to a Swiss entity in 2002. The cedants were insurance companies located outside Germany (from both Member States and outside the EU ).
From now on, until the ECJ gives judgment, firms are advised to seek rulings from their tax authority to confirm that insurance business transfers will fall within the transfer of a going concern and thus will not attract VAT.
For further information, please contact Andreas Börner in our Munich office.
Italy updates legislation on non-life multi-year policies
The Italian Parliament is currently discussing a bill proposed by the Government which would introduce further amendments to the rules contained in the Italian Civil Code regarding the duration of non-life insurance policies. In particular, the bill proposes that insurers may only sell a multi-year non-life insurance policy where such policy is entered into for consideration of a premium that (on average) is lower than one usually applied by the insurer for a single year policy.
The history of multi-year policies on the Italian market is complex and the rules governing such policies have been subject to several changes in the last few years. Until 2006, the Italian market was characterised by multi-year policies with a duration of up to ten years, which were allowed under the provisions of the Civil Code. Typically, unless provided otherwise, such policies allowed policyholders to withdraw from the contract after the tenth anniversary, with six months notice.
The legislation was changed in 2007 when the Italian Government wished to liberalise the insurance market. The changes provided that policyholders could withdraw from a multi-year policy at the yearly anniversary, with a sixty day notice period without any penalty or charge. For those contracts entered into before the enactment of the new provision, however, such withdrawal rights could only be exercised after the third yearly anniversary.
Two years later, following pressure from the Italian insurers’ association amongst others (who have tried to maintain that the 2007 rules only applied to policies entered into by consumers), the Italian Government now proposes the above described changes to the rules applicable to multi-year policies in order that a compromise may be reached with insurers.
Should the Italian Parliament approve the proposed changes, the rules will again only apply to those contracts entered into after the new legislation comes into force. As a result, policies entered into during the last few years will be subject to one of three different regimes, depending upon the date on which the contracts were entered into. It is therefore likely that disputes will arise in relation to those cases which are not specifically regulated by the law. For example, it is not clear whether a contract expressly renewed by the parties with minor amendments to the original wording, should be considered a new contract and therefore subject to the latest regime, or rather as an existing contract, subject to the 2007 rules.
For further information please contact Nicolò Juvara in our Milan office:
China revises insurance law
In February 2009, the Standing Committee of the National People’s Congress promulgated the revised People’s Republic of China Insurance Law which will become effective on 1 October 2009.
The principal changes introduced in the revised insurance law are as follows:
- Insurance companies’ funds can be invested in securities and immovable property.
- The new rules restrict connected transactions between/among insurance companies’ shareholders, actual controller(s), directors, supervisors and senior managers by establishing management and disclosure systems of connected transactions.
Other changes have been made to the law such as new rules on insurance companies’ liability, reinsurance and the competency of shareholders and senior managers of an insurance company.
For further information please contact Justin Wilson in our Shanghai office.
Creating one of the best resourced legal practices in Asia Pacific
International legal practice Norton Rose Group announced in June that Deacons Australia will join Norton Rose Group in January 2010. The decision follows the completion of successful votes by the respective partnerships on 22 June 2009. The new international legal practice will be called Norton Rose Group and will take effect from 1 January 2010.
In the Asia Pacific region, it will bring together more than 700 fee earners operating from 12 offices in Bangkok, Beijing, Brisbane, Canberra, Hong Kong, Jakarta, Melbourne, Perth, Shanghai, Singapore, Sydney and Tokyo.
From 1 January 2010, Norton Rose Group will be led by Group Chief Executive Peter Martyr, the current Norton Rose LLP Chief Executive, and Deputy Group Chief Executive Don Boyd, the current Deacons Australia Chief Executive Partner. Norton Rose LLP Chairman, Stephen Parish, will be the Chairman of Norton Rose Group.
Norton Rose Group will be a significant global player in legal services bringing together the heritage, strength, scale, and capabilities of two highly successful firms. The Group will have a common global ambition, quality of service to clients, values, systems and procedures.
Takaful Law Firm of the Year
We are delighted to announce that on Wednesday 1 July 2009, Norton Rose LLP won Takaful Law Firm of the Year at the International Takaful Summit Awards Dinner.
The prestigious Takaful Awards have been running for two years and Norton Rose LLP has now won this award on both occasions.
Susan Dingwall (who leads our takaful practice) and Ffion Flockhart picked up the award on behalf of the practice.
Back to top