Transitional Provisions and Schedules

Part

INSPRU Prudential Sourcebook for Insurers

Chapter

Transitional Provisions and Schedules

Printed on: 15/11/2024

Rulebook at: 01/02/2012

Transitional Provisions and Schedules

INSPRU TP

Transitional provisions

Application

1.1

INSPRU TP 1 applies to an insurer unless it is:

(1)

a non-directive friendly society; or

(2)

an incoming EEA firm; or

(3)

an incoming Treaty firm.

Version of IPRU to be used

1.2

Any reference in INSPRU TP to IPRU(INS) is to the version in force on 30 December 2004.

Duration of transitional

1.3

INSPRU TP 1 applies until the relevant rule is revoked.

Continuing effect of waivers

1.4

A rule in INSPRU listed in the Table at INSPRU TP Table 2 is disapplied, or is modified in its application, to a firm:

(1)

in order to produce the same effect, including any conditions, as a waiver had on the corresponding rule in IPRU(INS);

(2)

for the same period as the waiver would have lasted, if shorter than the period in INSPRU TP 1.3;

provided the conditions set out in INSPRU TP 1.5 are satisfied.

1.5

The conditions referred to in INSPRU TP 1.4 are:

(1)

the rule is shown in the Table at INSPRU TP Table 2 as corresponding with the rule in IPRU(INS) in relation to which the waiver was granted to the firm;

(2)

the waiver was current as respects the firm immediately before 31 December 2004; and

(3)

there is no specific transitional rule relating to the waiver.

1.6

INSPRU TP 1.4 does not have effect if, and to the extent that, it would be inconsistent with any EU law obligation of the United Kingdom.

1.7

A firm which has the benefit of a waiver to which INSPRU TP 1.4 applies must:

(1)

notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver;

(2)

maintain a written record of the rule in INSPRU to which it considers the waiver applies; and

(3)

make the record available to the FSA on request.

INSPRU TP Table 2

Rules in INSPRU

Corresponding rules in IPRU (INS)

2.1.22

4.14(1)

3.1.34

5.11

3.1.39

5.11
5.11(4)
5.11(5)
5.11(9)
5.11(11)

3.1.58

2.3(2)

1.1.51

2.4(6)

1.1.56

2.4(1)

1.1.66

Appendix 2.1 2.4(1)(b)
Appendix 2.2 2.4(1)(b)
5.9(1)

1.2.40

5.9(2)

1.2.41

5.9(2)

1.2.43

5.10

1.2.74

5.16[deleted]

6.1.17

10.1
10.2
10.2(1)
10.2(2)
10.2(3)

6.1.23

10.2
10.2(1)
10.2(2)
10.2(3)

PRU waivers

Application

3.1

INSPRU TP 3 applies to an insurer unless it is:

(1)

a non-directive friendly society; or

(2)

an incoming EEA firm; or

(3)

an incoming Treaty firm.

Version of PRU to be used

3.2

A reference in INSPRU TP 3 to PRU is to the version in force on 30 December 2006.

Duration of transitional

3.3

INSPRU TP 3 applies until the relevant INSPRU rule is revoked.

Continuing effect of waivers

3.4

A rule in INSPRU is disapplied, or is modified in its application, to a firm:

(1)

in order to produce the same effect, including any conditions, as a waiver had on the rule in PRU;

(2)

for the same period as the waiver would have lasted, if shorter than the period in INSPRU TP 3.3;

provided the conditions set out in INSPRU TP 3.5 are satisfied.

3.5

The conditions referred to in INSPRU TP 3.4 are:

(1)

the rule in PRU in relation to which the waiver was granted to the firm was redesignated as the relevant rule in INSPRU by the Prudential Sourcebook for Insurers Instrument 2006;

(2)

the waiver was current as respects the firm immediately before 31 December 2006; and

(3)

there is no specific transitional rule relating to the waiver.

3.6

INSPRU TP 3.4 does not have effect if, and to the extent that, it would be inconsistent with any EU law obligation of the United Kingdom.

3.7

A firm which has the benefit of a waiver to which INSPRU TP 3.4 applies must:

(1)

notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver;

(2)

maintain a written record of the rule in INSPRU to which it considers the waiver applies; and

(3)

make the record available to the FSA on request.

EEA pure reinsurers

Application

4.1

INSPRU TP 4 applies to a pure reinsurer:

(1)

whose head office is in an EEA State other than the United Kingdom; and

(2)

which is not an incoming Treaty firm.

Duration of transitional

4.2

INSPRU TP 4 has effect in relation to a firm until 10 December 2008 or, if earlier, the date on which it becomes:

(1)

an incoming EEA firm by reason of having exercised its right to carry on the regulated activity of effecting or carrying out contracts of insurance in the United Kingdom in accordance with Schedule 3 to the Act (EEA Passport Rights); or

(2)

an incoming Treaty firm by reason of having exercised its right to carry on the regulated activity of effecting or carrying out contracts of insurance in the United Kingdom in accordance with Schedule 4 to the Act (Treaty Rights).

50% premiums and claims uplift for classes 11, 12 and 13; credit equalisation provision

4.3

The following rules or paragraphs of a rule do not apply to a firm:

(1)

INSPRU 1.1.56 R (1);

(2)

INSPRU 1.1.60 R (1); and

(3)

INSPRU 1.4.39 R to INSPRU 1.4.46 R.

Pure reinsurance groups

Application

5.1

INSPRU TP 5 applies to a pure reinsurer whose ultimate EEA insurance parent undertaking is the parent undertaking of a group comprised solely of reinsurance undertakings.

Duration of transitional

5.2

INSPRU TP 5 applies until 10 December 2007.

Group capital resources requirement

5.3

A firm need not comply with INSPRU 6.1.15 R.

Admissible assets

Application

6.1

INSPRU TP 6 applies to an insurer which is not a pure reinsurer.

Duration of transitional

6.2

INSPRU TP 6 applies until 30 December 2007.

GENPRU 2 Annex 7R

6.3

(1)

In determining whether its assets are admissible assets, instead of applying GENPRU 2 Annex 7, a firm may elect to treat as an admissible asset an asset that would have been an admissible asset for the purposes of the Integrated Prudential Sourcebook (PRU) as it was in force on 30 December 2006.

(2)

(1) does not apply when determining whether a derivative or quasi-derivative is an approved derivative or approved quasi-derivative.

(3)

If a firm applies (1) to any of its assets, it must do so for all of its assets except derivatives and quasi-derivatives.

Mathematical reserves

Application

7.1

INSPRU TP 7 applies to an insurer to which INSPRU 1.2 applies.

Duration of transitional

7.2

INSPRU TP 7 applies until the relevant rule is revoked.

7.3

INSPRU 1.2.79A R does not apply in respect of reinsurance and analogous non-reinsurance financing agreements entered into and the terms of which came into effect before 10 December 2009, provided that immediately before 6 October 2010 the firm had the benefit of INSPRU 1.2.79 R (2) in relation to those reinsurance or analogous non-reinsurance financing agreements.

06/10/2010

INSPRU Sch 1

Record keeping requirements

31/12/2006

INSPRU Schedule 1.1

The aim of the guidance in the following table is to give the reader a quick overall view of the relevant record keeping requirements.

31/12/2006

INSPRU Schedule 1.2

It is not a complete statement of those requirements and should not be relied on as if it were.

31/12/2006

INSPRU Schedule 1.3

Table

Handbook
reference

Subject of Record

Contents of Record

When record must be made

Retention Period

INSPRU 1.2.20 R

Mathematical reserves

(1)The methods and assumptions used in establishing the firm's mathematical reserves, including the margins for adverse deviation, and the reasons for their use(2)The nature of, reasons for, and effect of, any change in approach, including the amount by which the change in approach increases or decreases its mathematical reserves

Not specified

An appropriate period

INSPRU 1.3.17 R, INSPRU 1.3.19 R

Calculation of with-profits insurance capital component

(1)The methods and assumptions used in making any calculation required for the purposes of INSPRU 1.3 (and any subsequent changes) and the reasons for their use(2)Any change in practice (in particular changes in those items which will or may be significant in relation to the eventual claim values) and the nature of, reasons for, and effect of, any change in approach with respect to those methods and assumptions

Not specified

An appropriate period

INSPRU 1.5.23 R

Long-term insurance funds

A separate accounting record in respect of each of a firm's long-term insurance funds

Not specified

INSPRU 1.5.56 R, INSPRU 1.5.57 R

Branch accounting records in the United Kingdom

A record of the activities carried on from a non-EEA direct insurer's United Kingdom branch and, if it is an EEA-deposit insurer, from its branches in other EEA states including a record of:

(1)the income, expenditure and liabilities arising from activities of the branch or branches(2)the assets identified under INSPRU 1.1.20 R as available to meet those liabilities

Not specified

31/12/2006

INSPRU Sch 2

Notification and reporting requirements

31/12/2006

INSPRU Schedule 2.1

The aim of the guidance in the following table is to give the reader a quick overall view of the relevant notification requirements.

31/12/2006

INSPRU Schedule 2.2

It is not a complete statement of those requirements and should not be relied on as if it were.

31/12/2006

INSPRU Schedule 2.3

Table

Handbook reference

Matter to be notified

Contents of notification

Trigger event

Time allowed

INSPRU 2.1.23 R

That a reinsurance exposure to a reinsurer or group of closely related reinsurers is reasonably likely to exceed, or has exceeded, 100% of the firm's capital resources excluding capital resources held to cover property-linked liabilities

Fact that the limit is reasonably likely to be, or has been, exceeded
Note: upon notification under INSPRU 2.1.23 R the firm must:

(1)demonstrate that prudent provision has been made for the reinsurance exposure in excess of the 100% limit, or explain why in the opinion if the firm no provision is required, and(2)explain how the reinsurance exposure is being safely managed (see INSPRU 2.1.24R)

(1)A reasonable likelihood that the limit will be exceeded, or(2)if (1) does not apply , the limit being exceeded

As soon as the firm first becomes aware of the matter required to be notified

INSPRU 2.1.29 R

That the firm has exceeded, or anticipates exceeding, the limit expressed in INSPRU 2.1.28 E (in each financial year a firm should restrict the gross earned premiums which it pays to a reinsurer or group of closely related reinsurers to the higher of (a) 20% of the firm's projected gross earned premiums for that financial year and (b) £4 million)

Fact that the limit has been exceeded, or that the firm anticipates exceeding the limit
Note: upon notification under INSPRU 2.1.29 R the firm must explain to the FSA how, despite the excess reinsurance concentration, the credit risk is being safely managed (see INSPRU 2.1.30 R)

The limit being exceeded, or an anticipation that the limit will be exceeded

Immediately

INSPRU 3.1.65 R

Syndicate liabilities not covered by matching syndicate assets as required by INSPRU 3.1.53 R

Nature and extent of syndicate liabilities not covered by matching syndicate assets as required by INSPRU 3.1.53 R

Syndicate liabilities are no longer covered by matching syndicate assets as required by INSPRU 3.1.53 R

Immediately

INSPRU 6.1.43B R

Intention of a group undertaking to issue a capital instrument for inclusion in group capital resources

Fact of intention and details of intended amount, issue date, type of investor, stage of capital, features of instrument and confirmation of compliance with rules

Intention to issue

As soon as proposed issue becomes known to firm

INSPRU 6.1.43C R

Proposed changes to details of the issue of a capital instrument notified under INSPRU 6.1.43B R

Proposed change and all information required under INSPRU 6.1.43B R (1) to INSPRU 6.1.43B R (4)

Intention to change any details of the issue previously notified to the FSA

As soon as the changes are proposed

INSPRU 6.1.43D R

Proposed establishment of a debt securities program by a group undertaking

All information required by INSPRU 6.1.43B R (1) to INSPRU 6.1.43B R (4)

Intention to establish

As soon as proposed establishment becomes known to firm

INSPRU 6.1.43F R

Issue of capital instruments by a group undertaking under INSPRU 6.1.43E R

All information required under INSPRU 6.1.43B R (1) to INSPRU 6.1.43B R (3) and confirmation that no changes have been made to the terms of the instrument since the previous issue of a similar instrument

Intention to issue

No later than date of issue

INSPRU 7.1.83 R

Syndicate ICA and balancing amount in respect of each syndicate

Notification should be made periodically

As part of the annual capital-setting process, in good time for the Society to review and place appropriate reliance on them when determining capital assessments for each member

INSPRU 7.1.89 R

Significant doubt about the adequacy of a syndicate ICA or balancing amount with respect to syndicate risks and controls

Revised syndicate ICA and balancing amount

The managing agent considers that syndicate ICA and balancing amount communicated in the capital setting process are no longer adequate in the light of the risks to which the syndicate business is exposed

Immediately

INSPRU 8.2.17 R

Information the managing agent has concerning material risks to funds at Lloyd's or central assets

All information concerning relevant risk

Receipt of information

As soon as possible

INSPRU 8.2.23 R

Intention to approve the form of any new Lloyd's trust deed

Fact of intention

Intention to approve

As soon as practical

INSPRU 8.2.24 R

Intention to make any amendment which may alter the meaning or effect of any byelaw (including Lloyd's trust deeds, standard form letters of credit and guarantees)

Fact of intention

Intention to amend

As soon as practical

INSPRU 8.2.25 R

Full details of form of new Lloyd's trust deed or amendments to byelaw (including Lloyd's trust deeds, standard form letters of credit and guarantees)

(1)Statement of purpose of amendment or new form and expected impact, if any, on policyholders, managing agents, members and potential members, and(2)Description of the consultation undertaken and summary of significant responses to consultation

Not specified

Normally not less than three months in advance of proposed change

01/02/2012

INSPRU Sch 3

Fees and other requirement payments

31/12/2006

There are no requirements for fees or other payments in INSPRU.

31/12/2006

INSPRU Sch 4

Powers exercised

31/12/2006

INSPRU Schedule 4.1

The following powers and related provisions in the Act have been exercised by the FSA to make the rules in INSPRU:

Section 138 (General rule-making power)

Section 141 (Insurance business rules)

Section 149 (Evidential provisions)

Section 150(2) (Actions for damages)

Section 156 (General supplementary powers)

Section 316(1) (Direction by Authority)

Section 318(1) (Exercise of powers through Council)

06/10/2009

INSPRU Schedule 4.2

The following power in the Act has been exercised by the FSA to give the guidance in INSPRU:

Section 157(1) (Guidance)

31/12/2006

INSPRU Sch 5

Rights of action for damages

31/12/2006

INSPRU Schedule 5.1

The table below sets out the rules in INSPRU contravention of which by an authorised person may be actionable under section 150of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

31/12/2006

INSPRU Schedule 5.2

If a "Yes" appears in the column headed "For private person", the rule may be actionable by a private person under section 150(or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001/2256)). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right of action under section 150(2)of the Act. If so, a reference to the rule in which it is removed is also given.

31/12/2006

INSPRU Schedule 5.3

The column headed "For other person" indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

Chapter/Appendix

Section/Annex

Right of action under section 150

For private person

Removed

For other person

All rules in INSPRU

Yes (INSPRU 9.1.1R)

31/12/2006

INSPRU Sch 6

Rules that can be waived

31/12/2006

The rules in INSPRU can be waived by the FSA under section 148 of the Act (Modification or waiver of rules), except for INSPRU 9.1.1 R (Actions for damages). However, if the rules incorporate requirements laid down in European directives, it will not be possible for the FSA to grant a waiver that would be incompatible with the United Kingdom's responsibilities under those directives. It therefore follows that if a rule in INSPRU contains provisions which derive partly from a directive, and partly not, the FSA will be able to consider a waiver of the latter requirements only, unless the directive provisions are optional rather than mandatory.

31/12/2006