Resolution and recovery of UK-based insurers
Produced in partnership with Alice Carse of Devereux Chambers
Resolution and recovery of UK-based insurers

The following Insurance & Reinsurance guidance note Produced in partnership with Alice Carse of Devereux Chambers provides comprehensive and up to date legal information covering:

  • Resolution and recovery of UK-based insurers
  • Background
  • The regulatory regime
  • The insolvency regime
  • Treatment of policies
  • Financial services compensation scheme
  • Interaction with schemes of arrangement


In December 2000, Equitable Life closed to new business. The collapse of what had been considered a trusted insurer was as a result of Equitable Life being unable to pay guaranteed annuities to thousands of customers.

There have been at least 15 investigations into the collapse of Equitable Life. In short, these investigations revealed shortcomings in the relevant regulatory regime, under the Insurance Companies Act 1982 (ICA 1982)and that the regulation of Equitable Life had not been sufficiently robust. A 2004 report by Lord Penrose did not apportion blame but was critical of the way in which Equitable Life was regulated. This finding was supported by the European Parliament’s 2007 report. In July 2008, the Ombudsman published a report entitled ‘A Decade of Regulatory Failure’, which made, among other things, ten findings of maladministration. The main recommendation was that the Government establish a compensation fund for those who had suffered loss. In 2009, the Government accepted certain findings of maladministration, apologised to policy holders and stated its intent to start a compensation scheme.

The regulatory regime

The Prudential Regulation Authority (PRA) is the UK’s prudential regulator for deposit-takers, insurance (and re-insurance) companies and major investment firms. The Financial Services and Markets Act 2000 (FSMA 2000) sets out the objectives and powers of the PRA.

The PRA’s general objective is

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