Recent regulatory developments of interest to insurers and their intermediaries. See also our General regulatory news in the Related Materials links.

Contents

• COVID-19: FCA updates on business interruption insurance test case
• Brexit: Lloyd's delays scheme effective date of Part VII transfer of EU business
• COVID-19: EIOPA supervisory statement on Solvency II recognition of schemes based on reinsurance

COVID-19: FCA updates on business interruption insurance test case

The UK Financial Conduct Authority (FCA) has published a number of updates to its webpage on the High Court test case concerning business interruption (BI) insurance. Among other things, it has published:

• the agreed list of issues and common ground, which summarises what is and is not in dispute between the parties. This supersedes the questions for determination published previously;
• ten sets of agreed facts, which relate to a range of topics including Agreed Facts 1 - Chronology of Government Response to COVID-19 in the UK, Agreed Facts 4 - Restrictions, guidance, advice and other information provided to the public and Agreed Facts 9 - Distribution Channels;
• the new assumed facts, which contains factual scenarios that some parties will use in the trial to illustrate their views as to how coverage is triggered; and
• the draft transcript of the first and second days of the trial, which took place on 20 and 21 July 2020.

The eight-day court hearing is due to end on 30 July 2020. The FCA advises that a final transcript will be published when it is available.

Brexit: Lloyd's delays scheme effective date of Part VII transfer of EU business

Lloyd's has announced that it has decided to delay the scheme effective date of its Part VII transfer of its EU business from Lloyd's members to its Belgium subsidiary, Lloyd's Insurance Company S.A. (LIC). The court hearing to sanction the transfer is now scheduled for 18 November 2020 and, therefore, the scheme effective date will move from 29 October 2020 to 30 December 2020.

Lloyd's explains that it has taken this decision to enable itself, LIC and market participants to be ready and to give the maximum amount of time available for the successful implementation of the Part VII transfer, which is both complex and substantial. It also confirms that the delay will not affect LIC's ongoing ability to continue writing new European Economic Area (EEA) business.

The Part VII transfer is taking place in the context of the loss of passporting rights arising due to the UK's withdrawal from the EU. It will allow all existing policies of Lloyd's customers across the EEA to be serviced by LIC and will ensure contract continuity.

COVID-19: EIOPA supervisory statement on Solvency II recognition of schemes based on reinsurance

The European Insurance and Occupational Pensions Authority (EIOPA) has published a supervisory statement on the recognition of schemes based on reinsurance with regard to COVID-19 and credit insurance under the Solvency II Directive. The supervisory statement sets out EIOPA's view on the treatment, for Solvency II purposes, of schemes based on reinsurance implemented by member states within the temporary framework for state aid measures, which were introduced to support the economy in light of COVID-19.

EIOPA has identified significant differences in the way that national schemes in the area of credit insurance are implemented through the temporary framework. To ensure a level playing field and consistent treatment of schemes with the same economic consequences as reinsurance, in the statement, EIOPA outlines several supervisory recommendations for national competent authorities.

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