Office of Public Sector Information
After section 23 of the 1975 Act there shall be inserted—
(1) If—
(a) a payment is treated because of section 14(1) above as reducing a sum payable in accordance with section 6 or 8 above,
(b) the payment is made with the consent of the holder of the policy or security under which the liability to which the payment is referable arises, and
(c) at the time of the payment, that policy or security is one in relation to which the person by whom the payment is made (“the payer”) is the holder’s intermediary,
it shall be the duty of the Board to secure that a sum equal to the full amount of the reduction is paid to the payer as soon as reasonably practicable after the beginning of the liquidation to which the Board’s liability under that section was attributable.
(2) The Board may secure the payment of any sum payable under subsection (1) above by either or both of the following methods, that is to say—
(a) by themselves making payments in respect of the sum in question; or
(b) by securing by any measures appearing to them to be appropriate that such payments are made by any other person.
(3) Section 13(3) above shall apply in relation to subsection (1) above as it applies in relation to any provision of sections 6 to 11 above.
(4) For the purposes of this section, a person is another’s intermediary in relation to a policy or security at any time when he is engaged by the other to assist in its administration and performance.”
(1) Section 1 of the 1975 Act (which makes provision for the financing of the Board’s expenditure in performing their functions) shall be amended as follows.
(2) In subsection (4) (limit on amount outstanding in respect of principal of money borrowed by the Board), for “£10 million” there shall be substituted “£40 million”.
(3) After that subsection there shall be inserted—
“(4A) The Secretary of State may by order made by statutory instrument amend subsection (4) above by substituting a different figure for the figure for the time being specified there.
(4B) An order made under this section may be revoked by a subsequent order so made.
(4C) Any statutory instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.”
(1) In section 11(5)(a) of the 1975 Act (powers of the Board in relation to the transfer of the long term business of a company in liquidation), after “another insurance company to which this Act applies” there shall be inserted “or an authorised friendly society”.
(2) In section 16(3) of that Act (corresponding provision in relation to companies in financial difficulties), after “another insurance company to which this Act applies” there shall be inserted “or an authorised friendly society”.
(1) In section 32 of the 1975 Act (interpretation), in subsection (2) (which provides that expressions used in that Act have the same meaning as in the [1982 c. 50.] Insurance Companies Act 1982), after “above,” there shall be inserted “but subject to subsection (2ZA) below”.
(2) After that subsection there shall be inserted—
“(2ZA) In its application by virtue of subsection (2) above, the definition of the expression “policy holder” (in section 96(1) of the [1982 c. 50.] Insurance Companies Act 1982) shall have effect as if the reference in paragraph (b) of the definition to a person to whom a sum is due included a person to whom a sum is contingently due.”
(1) In section 32 of the 1975 Act (interpretation), after subsection (2ZA) there shall be inserted—
“(2A) Subject to subsection (2C) below, the situation of a risk for the purposes of this Act shall be determined as follows—
(a) in the case of insurance relating to buildings or to buildings and their contents (in so far as the contents are covered by the same policy), the risk shall be treated as situated where the property is situated;
(b) in the case of insurance relating to vehicles of any type, the risk shall be treated as situated where the vehicle is registered;
(c) in the case of policies of a duration of four months or less covering travel or holiday risks (whatever the class concerned), the risk shall be treated as situated where the policyholder took out the policy;
(d) in a case not covered by paragraphs (a) to (c) above—
(i) where the policyholder is an individual, the risk shall be treated as situated where he has his habitual residence at the date when the contract is entered into;
(ii) where the policyholder is not an individual, the risk shall be treated as situated where the establishment of the policyholder to which the risk relates is situated at that date.
(2B) Subject to subsection (2C) below, the situation of a commitment for the purposes of this Act shall be determined as follows—
(a) in the case of a policy where the policyholder is an individual, the commitment shall be treated as situated where the individual has his habitual residence at the date when the commitment is entered into;
(b) in the case of a policy where the policyholder is not an individual, the commitment shall be treated as situated where the establishment to which the commitment relates is situated at that date.
(2C) The Secretary of State may by regulations made by statutory instrument make such provision as he thinks fit about how the situation of a risk or commitment is to be determined for the purposes of this Act; but no regulations shall be made under this subsection unless a draft of the regulations has been laid before and approved by a resolution of each House of Parliament.”
(2) In section 31 of that Act (regulations), in subsection (1) (which provides for negative resolution procedure), after “any provision of this Act” there shall be inserted “, except section 32(2C) below,”.
(1) In section 32 of the 1975 Act, in subsection (1), at the appropriate places in alphabetical order, there shall be inserted—
““authorised friendly society” means a society authorised under section 32 of the [1992 c. 40.] Friendly Societies Act 1992 to carry on in the United Kingdom insurance business such as is mentioned in section 31 of that Act;”
““EC company” and “EEA State” have the same meanings as in the [1982 c. 50.] Insurance Companies Act 1982;”
““establishment” has the same meaning as in the Insurance Companies Act 1982;”.
(2) In that section, after subsection (2C) there shall be inserted—
“(2D) For the purposes of this Act—
(a) a company shall be taken to provide general insurance in the United Kingdom if it covers (otherwise than by reinsurance) a risk situated there through an establishment in another EEA State, and
(b) a company shall be taken to provide long term insurance in the United Kingdom if it covers (otherwise than by reinsurance) a commitment situated there through an establishment in another EEA State.”
In section 21 of the 1975 Act, at the end there shall be inserted—
“(10) Subject to subsections (11) and (12) below, this section and Schedule 3 to this Act apply to qualifying friendly societies carrying on general business or long term business in the United Kingdom as they apply to insurance companies authorised under section 3 or 4 of the [1982 c. 50.] Insurance Companies Act 1982 carrying on such business there.
(11) In the application of subsections (4), (7A) and (7B) above by virtue of subsection (10) above, contributions in respect of discretionary benefits shall be disregarded.
(12) No levy under subsection (1) or (2) above may be imposed on a friendly society for the purpose of financing any expenditure in pursuance of a function which arose before the day on which section 19 of the Policyholders Protection Act 1997 came into force.”
(1) Schedule 17 to the [1992 c. 40.] Friendly Societies Act 1992 (which prospectively amends the 1975 Act for the purpose of extending it to contracts of insurance with friendly societies) shall have effect subject to the amendments in Part I of Schedule 4 to this Act (which are consequential on the other provisions of this Act).
(2) The 1975 Act, in its application to contracts of insurance with friendly societies entered into before the day on which section 2 above comes into force, shall have effect subject to the amendments in Part II of Schedule 4 to this Act (which have the effect that eligibility for protection in relation to such contracts is determined without regard to the amendments made by section 2 above).
(3) In this section, “friendly society” has the same meaning as in the [1992 c. 40.] Friendly Societies Act 1992.
In this Act—
“the Board” means the Policyholders Protection Board; and
“the 1975 Act” means the [1975 c. 75.] Policyholders Protection Act 1975.
The enactments mentioned in Schedule 5 to this Act are hereby repealed to the extent specified in the third column of that Schedule.
(1) This Act may be cited as the Policyholders Protection Act 1997.
(2) Section 20(1) and (3) above, section 22 above, so far as relating to the [1992 c. 40.] Friendly Societies Act 1992, and this section shall come into force on the day on which this Act is passed.
(3) The remaining provisions of this Act shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint; and different days may be so appointed for different purposes.
(4) An order under subsection (3) above may contain such transitional provisions and savings as the Secretary of State thinks fit.
(5) This Act extends to Northern Ireland.
Policyholders Protection Act 1997