Policyholders are to be given more information about what would happen to their policy contr...
Policyholders are to be given more information about what would happen to their policy contract if it is transferred to another insurance company thanks to requirements published by the FSA this week.
The transfers in question typically take place when an insurance company restructures - following a takeover or merger for example. In such instances, consent from a policyholder is not required although it can affect their policy.
From 1 December, procedures for non-life companies will be brought into line with those for life companies, with transfers of policies from one insurer to another needing to be approved by the court.
In addition, for transfers of both life and non-life policies after 1 December, the expert appointed to provide an opinion to the court on any transfer scheme will need to be approved by the FSA. The expert's opinion will be made available to the policyholders of the firms involved in the transfer, which the FSA hopes will improve the information available to non-life policyholders.
The expert's opinion will describe the effect of the transfer on policyholders, and give reasons for his opinion. Policyholders can use this information to help them assess whether the transfer might harm their interests.
The FSA has the right to be heard by the court and intends to use this power to ensure that its views are taken into account, both on the fairness or otherwise to policyholders of any scheme and on whether policyholders have been given suitable information to assess the scheme.
Consultation Paper 110 Insurance Business and Friendly Society Transfers seeks comments by 19 October 2001 on the application of Part VII of the Act. It is available on the FSA website at www.fsa.gov.uk
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