INSURANCE Citation and commencement 1 These Regulations may be cited as the Insurance (Lloyd's) Regulations 1996 and shall come into force on 24th December 1996. Interpretation 2 In these Regulations— “the 1982 Act ” means the Insurance Companies Act 1982; “the 1983 Regulations ” means the Insurance (Lloyd's) Regulations 1983 ; and “former member” means a former underwriting member of Lloyd’s (within the meaning of the Lloyd’s Act 1982 ) who has ceased to be a member of Lloyd's, whether by resignation or otherwise, in accordance with the Lloyd’s Act 1982 and any byelaw made thereunder. AMENDMENTS OF 1982 ACT Application of 1982 Act to former members of Lloyd's 3 1 If and so long as a former member continues to be liable as a party to contracts of insurance entered into by him as a member of Lloyd's— a he shall not require authorisation under section 3 of the 1982 Act by virtue only of being so liable (or of doing anything to meet any liability of his under any of those contracts); but b he shall be treated for the purpose of the 1982 Act as if he were a UK company to which Part II of that Act applies in respect of any liability of his under any of those contracts. 2 Paragraph (1) above shall not be taken to affect any question whether (apart from the provisions of this regulation) a former member would require authorisation under section 3 of the 1982 Act or be a person who is subject to Part II of that Act. 4 Section 68 of the 1982 Act (power to modify Part II in relation to particular companies) shall have effect in relation to any former member to whom regulation 3(1) above applies with the following modifications— a the requirement for an order under that section to be made on the application, or with the consent, of the person in respect of whom it is made shall be omitted; b the order may exclude or modify the application to the person in respect of whom it is made of any provision of Part II of that Act. Requirements for Lloyd’s underwriters 5 In section 15(4) of the 1982 Act (application of Part II to members of Lloyd's)— a omit the words “he complies with”; b at the end add the words “are complied with by or in respect of him”. 6 1 Section 83 of the 1982 Act (requirements to be complied with by Lloyd’s underwriters) is amended as follows. 2 In subsection (4), omit the words following “Lloyd's”. 3 For subsection (5) substitute— 4A The Council of Lloyd’s and the Secretary of State shall be furnished with a certificate from the accountant who audits the accounts of an underwriter which— a is in the prescribed form; and b contains the statements mentioned in subsection (5) below. 5 The statements so required in relation to the accounts of an underwriter are statements that in the opinion of the auditor— a the value of the assets available to meet the underwriter’s liabilities in respect of insurance business is correctly shown in the accounts; and b the value of those assets is sufficient to meet the liabilities calculated— i in the case of long term business by an actuary; and ii in the case of other liabilities, by the auditor on a basis approved by the Secretary of State. 7 After section 85(4) of the 1982 Act (Lloyd’s underwriters—transfer of business) insert— 5 In this section references to a member of Lloyd’s include references to a former underwriting member of Lloyd’s (within the meaning of the Lloyd’s Act 1982) who has ceased to be a member of Lloyd's, whether by resignation or otherwise, in accordance with the Lloyd’s Act 1982 and any byelaw made thereunder. AMENDMENTS OF 1983 REGULATIONS Audit 8 1 In regulation 4(1) of the 1983 Regulations, for the words “underwriting member of Lloyd's” substitute the word “underwriter”. 2 For Schedule 2 to the 1983 Regulations (audit certificate), substitute Schedule 2 as set out in the Schedule to these Regulations. Statement of business by Council of Lloyd's 9 1 After regulation 5(1) of the 1983 Regulations (statement of business) insert— 1A If it appears to the Council of Lloyd’s that there are special reasons for departing from any of the annexed forms, it may, with the approval of the Secretary of State, do so, but particulars of any such departure and the reasons for it and its effect shall be given by way of an additional note to the relevant form or forms. 2 In Schedule 3 to the 1983 Regulations (statement of business by Council of Lloyd's) for paragraph 3 substitute the following paragraph— 3 A certificate for the purposes of section 83(4A) of the Insurance Companies Act 1982 has been furnished to the Council of Lloyd’s and the Secretary of State in respect of every underwriter at Lloyd’s who has not fully reinsured his liabilities by reinsurance to close in accordance with Lloyd’s byelaws. 3 For paragraph 5 of that Schedule, substitute the following paragraph— 5 Every member of Lloyd’s has complied with regulation 63 (which relates to co-insurance) of the Insurance Companies Regulations 1994 (as applied by regulation 3(1) of the Insurance (Lloyd's) Regulations 1983 ). 4 In Schedule 3 to those Regulations— a for the words “underwriting members of Lloyd's” and “underwriting members”, wherever they appear, substitute the words “underwriters at Lloyd's” and “underwriters” respectively; b for the words “19 year of account”, wherever they appear, substitute the words “(year) year of account”; c in paragraph 4 for the words “31 December 19 ” substitute the words “31 December (year)”; d for the words “Secretary General of the Council of Lloyd's” substitute the words “Secretary to the Council of Lloyd's, For and on behalf of the Council of Lloyd's”; e in Forms 1 to 10 for the words “31 December 19 ”, wherever they appear, substitute the words “31 December (year)”; f in Forms 1 and 2— i for the words in line 2 substitute the words “Reinsurance premiums received from, and amounts placed to reserve in respect of, estimated liabilities of previous accounts”; ii for the words in line 4 substitute the words “Gross investment return on syndicate funds”; iii for the words in line 8 substitute the words “Reinsurance premiums paid at close of account and amounts placed to reserve in respect of estimated liabilities of accounts which remain open”; g in Form 4, columns 2 and 3 delete the words “(see note 2)”; and h in Form 9— i for the words in Note 3 substitute the words “A Lloyd’s Special Reserve Fund is a fund maintained under arrangements to which section 452 of the Income and Corporation Taxes Act 1988 applies. New arrangements apply from the 1992/93 tax year under section 175 of the Finance Act 1993 ”; and ii for the words in Note 5 substitute the words “The Lloyd’s Central Fund is a fund, held by the Society of Lloyd's, to which underwriters contribute and which can be applied for the purpose of preventing or making good any default by any member of the Society under any contract of insurance or guarantee underwritten at Lloyd's”. Transitional provisions 10 1 It is immaterial for the purposes of regulation 3(1)(a) when a former member ceased to be a member of Lloyd's; but regulations 3(1)(b) and 4 do not apply to a former member whose membership ceased before the day on which these Regulations come into force. 2 Regulations 6, 8 and 9 apply in relation to the 12 months ending on 31st December 1996, as well as subsequent years. Anthony Nelson, Minister for Trade, Department of Trade and Industry 2nd December 1996