Insurance Business Transfer (Part VII) Process

The proposed transfer has been carefully designed to ensure that it will not change how policies operate. Policyholders will see no direct administrative change as a result of the proposed transfer and the process for making claims and any payments that may be due in settlement of a valid claim is therefore unaffected by the proposed transfer.

Nevertheless, the Part VII legislation includes a number of separate protections for policyholders including ongoing regulatory review, the appointment of an Independent Expert to consider the terms and effect of the proposed transfer and notification to policyholders, allowing them time to fully consider the proposals. The proposals must be sanctioned by the High Court at a hearing where policyholders are entitled to be represented, if they consider the proposals will be detrimental to them.

The Scheme

The proposed transfer is to be implemented by an insurance business transfer scheme under Part VII of the Financial Services and Markets Act 2000 (“Scheme”). The Scheme is the legal mechanism for effecting the transfer. You can find a copy of the Scheme and a summary of the Terms of the Scheme in the document library.

The Scheme requires the approval of the High Court of England and Wales (“High Court”).

The High Court will only approve the proposed transfer if it considers it appropriate in all the circumstances. If the proposed transfer is approved by the High Court, the Effective Date for the proposed transfer is expected to be  30 December 2020. On the Effective Date, all transferring EEA Policies caught by the Scheme and related assets and liabilities will transfer to Lloyd’s Brussels. Any claims or proceedings against the Members, in connection with these EEA Policies, shall be continued by or against Lloyd’s Insurance Company S.A. (“Lloyd’s Brussels”)

If the Scheme is approved by the High Court, the proposed transfer will not change terms and conditions of any policy, except that Lloyd’s Brussels will become the insurer and Data Controller in respect of EEA Policies.

The full Scheme can be accessed via the Document Library. Due to its technical content itis only available in English. A summary of the main terms of the Scheme is available in French, Spanish Italian, German and Dutch.

Regulatory Review

Lloyd’s is regulated by the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”) (the “UK Regulators”). As part their ongoing review of the proposals, the UK Regulators have been consulted through the design and planning of the transfer proposals. The UK Regulators have the right to be heard at Court and will, as part of their review process, each provide reports on the proposed transfer to the Court.

Independent Expert Review & Report

Under Part VII of FSMA, an Independent Expert is required to be appointed to assess the proposals. The appointment of the Independent Expert was made by Lloyd’s and has been approved by the PRA, in consultation with the FCA.

Notification of Policyholders

Lloyd’s is undertaking the notification activity on behalf of its Members, with the assistance of Lloyd’s Market Participants (Managing Agents, Brokers and Coverholders), to ensure the adequate notification of transferring policyholders.

Timings and Sequence of Events

• Brexit Day: 31 January 2020
• End of Transition Period: 31 December 2020
• High Court Directions Hearing: 12 May 2020
• Notifications Phase: June – August 2020
• High Court Sanctions Hearing: 18 November 2020
• Scheme Effective Date: 30 December 2020
• End of Transition Period: 31 December 2020