Effecting and carrying out contracts of insurance
Effecting and carrying out contracts of insurance

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Effecting and carrying out contracts of insurance
  • Background to the regulated activities of effecting and carrying out contracts of insurance
  • Effecting and carrying out insurance contracts under FSMA 2000
  • PRA-regulated Activities
  • Regulated contracts of insurance
  • Effecting and carrying out insurance contracts as principal.
  • Is the insurance activity being carried on by way of business in the UK?
  • Potential exclusions

Background to the regulated activities of effecting and carrying out contracts of insurance

The regulation of carrying on insurance business in the UK dates back to 1870 with the enactment of the Life Assurance Companies Act 1870 (which contained a requirement for any company engaged in life assurance business to make a deposit in court by way of security). A number of enhancements were made by successive pieces of legislation.

The original UK system of regulation was rendered somewhat obsolete by the implementation of various pieces of EU legislation dating back to the early 1970s: there followed a directive governing life assurance. These directives have been enhanced by the ‘second non-life insurance directive’ (Directive 88/357/EEC) and the ‘second life insurance directive’ (Directive 90/619/EEC), which were soon superseded by the ‘third non-life directive’ (Directive 92/49/EEC) and ‘third life directive’ (Directive 92/96/EEC).

  1. the First Non-Life Insurance Directive (Directive 73/239/EEC) brought in a European Economic Community (EEC) system of solvency margins, as well as a procedure for insurers to follow if they fail to meet such requirements

  2. the First Life Insurance Directive (Directive 79/267/EEC), which contained similar provisions to the first non-life insurance directive

  3. the Second Non-Life Insurance Directive (Directive 88/357/EEC) which enhanced the first non-life insurance directive

  4. the Second Life Insurance Directive (Directive 90/619/EEC) which enhanced the first life insurance directive