ukpga/1982/50 — Insurance Companies Act 1982 (repealed)

Insurance Companies Act 1982 (repealed) 1982 c. 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part I Restriction on Carrying on Insurance Business Preliminary Classification. 1 1 For the purposes of this Act insurance business is divided into long term business and general business; and— “ long term business ” means insurance business of any of the classes specified in Schedule 1 to this Act, and “ general business ” means insurance business of any of the classes specified in Part I of Schedule 2 to this Act. 2 For the purposes of this Act the effecting and carrying out of a contract whose principal object is within one class of insurance business, but which contains related and subsidiary provisions within another class or classes, shall be taken to constitute the carrying on of insurance business of the first-mentioned class, and no other, if subsection (3) or (4) below applies to the contract. 3 This subsection applies to a contract whose principal object is within any class of long term business but which contains subsidiary provisions within general business class 1 or 2 if the insurer is authorised under section 3 or 4 below to carry on long term business class I. 4 This subsection applies to a contract whose principal object is within one of the classes of general business but which contains subsidiary provisions within another of those classes, not being class 14 or 15 or (except as mentioned in subsection (4A) below) class 17. 4A Subsection (4) applies to a contract whose principal object is within one of the classes of general business but which contains subsidiary provisions within general business class 17 if— a the principal object of the contract is the provision of assistance for persons who get into difficulties while travelling, while away from home or while away from their permanent residence, or b those subsidiary provisions concern disputes or risks arising out of, or in connection with, the use of sea-going vessels Restriction on carrying on insurance business. 2 1 Subject to the following provisions of this section, no person shall carry on any insurance business in the United Kingdom unless authorised to do so under section 3 or 4 below. 1A Subsection (1) above shall not apply to insurance business carried on by anEC company through a branch in respect of which such of the requirements of Part I of Schedule 2F to this Act as are applicable have been complied with. 2 Subsection (1) above shall not apply to insurance business (other than industrial assurance business) carried on— a by a member of Lloyd’s, or b by a body registered under the enactments relating to friendly societies; or c by a trade union or employers’ association where the insurance business carried on by the union or association is limited to the provision for its members of provident benefits or strike benefits. In this subsection “trade union” and “employers’ association” have (throughout the United Kingdom) the meanings respectively assigned by section 1 and section 122(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 . 3 Subsection (1) above shall not apply to industrial assurance business carried on by a friendly society registered under the enactments relating to such societies. 4 Subsection (1) above shall not apply to general business of class 14, 15, 16 , 17 or 18 if it is carried on solely in the course of carrying on, and for the purposes of, banking business. 5 Subsection (1) above shall not apply to general business consisting in the effecting and carrying out, by an insurance company that carries on no other insurance business, of contracts of such descriptions as may be prescribed, being contracts under which the benefits provided by the insurer are exclusively or primarily benefits in kind. 6 In this Act ' EC company’ means an insurance company— a which is incorporated in or formed under the law of a member State other than the United Kingdom; b whose head office is in that member State; and c which is authorised in accordance with Article 6 of the first general insurance Directive or Article 6 of the first long term insurance Directive. 7 In relation to any time before it becomes a member State, each of the following, namely, Iceland, Liechtenstein andNorway , shall be treated as if it were a member State for all purposes of this Act. 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Authorised insurance companies Authorisation by Secretary of State. 3 1 The Treasury may authorise a body to carry on in the United Kingdom such of the classes of insurance business specified in Schedule 1 or 2 to this Act, or such parts of those classes, as may be specified in the authorisation. 2 An authorisation under this section may be restricted to industrial assurance business or to reinsurance business; and a body may not carry on industrial assurance business by virtue of an authorisation under this section unless the authorisation expressly extends to such business. 3 An authorisation under this section may identify classes or parts of classes of general business by referring to the appropriate groups specified in Part II of Schedule 2 to this Act. 4 On the issue to a body of an authorisation under this section, any previous authorisation of that body under this section or section 4 below shall lapse. Existing insurance companies. 4 1 A body that was, immediately before the commencement of this Act, authorised under section 3 or 4 of the Insurance Companies Act 1981 to carry on in the United Kingdom insurance business of a class specified in Schedule 1 or 2 to that Act (or a part of such a class) is authorised to carry on there insurance business of the class identified by the same number in Schedule 1 or 2 to this Act (or that part of such a class). 2 A body may not carry on industrial assurance business by virtue of this section unless— a it was carrying on such business immediately before 1st January 1982, or b it was immediately before the commencement of this Act authorised to carry on such business under section 3 of the Insurance Companies Act 1981. Applications for authorisation Submission of proposals etc. 5 1 The Treasury shall not issue an authorisation under section 3 above unless— a the applicant has submitted to them such proposals as to the manner in which it proposes to carry on business, such financial forecasts and such other information as may be required by or in accordance with regulations under this Act, and b The Treasury are satisfied on the basis of that and any other information received by them that the application ought to be granted. 1A The Treasury shall not issue an authorisation under section 3 above to an applicant which is a UK or non-EC company if it appears to the Treasury that the criteria of sound and prudent management are not or will not be fulfilled with respect to the applicant. 1B The Treasury shall not issue an authorisation under section 3 above to an applicant which is a UK or non-EC company if it appears to the Treasury that— a the applicant is an undertaking which is closely linked with any person; and b the applicant’s close links with that person, or any matters relating to any non-EEA laws or administrative provisions to which that person is subject, are such as would prevent the effective exercise by the Treasury or the Secretary of State of his functions under this Act in relation to the applicant; and in this subsection “non-EEA laws” means laws of a country or territory outside the European Economic Area and “non-EEA administrative provisions” shall be construed accordingly. 1C The Treasury shall not issue an authorisation under section 3 above to an applicant— a which is incorporated in the United Kingdom; b whose head office is outside the United Kingdom; b whose business is not restricted to business to which subsection (5) below applies; and d which is not excluded from each Directive mentioned in that subsection by Article 3 of that Directive. 2 Subject to subsection (3) below, the Treasury shall decide an application for an authorisation under section 3 above within six months of receiving the information referred to in subsection (1)(a) above; and if the Treasury refuse to issue the authorisation they shall inform the applicant in writing of the reasons for the refusal. 3 The Treasury may defer a decision on an application for an authorisation under section 3 above for such period as may be necessary for the purpose of implementing any decision of the Council or Commission of the Communities under— a Article 29b(4) of the first general insurance Directive; or b Article 32b(4) of the first long term insurance Directive. 4 In this Act— 'criteria of sound and prudent management’ means the criteria set out in Schedule 2A to this Act; ' EEA State’ means a State which is a Contracting Party to the EEA Agreement . . .; ' EFTA State’ means an EEA State which is not a member State; 'non-EC company’ means an insurance company— a whose head office is not in a member State; b which is authorised under section 3 or 4 above; and c whose business in the United Kingdom is not restricted to reinsurance business; 'UK company’ means an insurance company— a which is incorporated in the United Kingdom; b whose head office is in the United Kingdom; c which is authorised under section 3 or 4 above; d whose business is not restricted to business to which subsection (5) below applies; and e which is not excluded from each Directive mentioned in that subsection by Article 3 of that Directive; and any reference in this Part to an applicant or body which is a UK or non-EC company includes a reference to an applicant or body which would be such a company if the authorisation sought by it were issued. 5 This subsection applies to— a reinsurance business; b business which is excluded from the first long term insurance Directive by Article 2(2) or (3) of that Directive; c business which is excluded from the first general insurance Directive by Article 2(2)(b) of that Directive; and d business which is exempted from the authorisation requirements contained in this Part of this Act by subsections (2) to (5) of section 2 above. Combination of long term and general business. 6 The Treasury shall not under section 3 above authorise a body to carry on both long term business and general business unless— a the long term business is restricted to reinsurance; or b the body is at the time the authorisation is issued already lawfully carrying on in the United Kingdom, otherwise than under paragraph (c) below, both long term business and general business (in neither case restricted to reinsurance); or c in the case of a body which is a UK company, the general business is restricted to Group 1 of Part II to Schedule 2 to this Act (accident and health) or to any class or part of a class of insurance within that group. United Kingdom applicants. 7 1 The Treasury shall not issue an authorisation under section 3 above to an applicant whose head office is in the United Kingdom unless the applicant is— a a company as defined in section 735 of the Companies Act or Article 3 of the Companies (Northern Ireland) Order 1986 , or b a registered society, or c a body corporate established by royal charter or Act of Parliament and already authorised under section 3 or 4 above to carry on insurance business (though not to the extent proposed in the application). 2 The Treasury shall not issue an authorisation under section 3 above to an applicant whose head office is in the United Kingdom if it has an issued share capital any part of which was issued after the commencement of this section but is not fully paid up. 3 The Treasury shall not issue an authorisation under section 3 above to an applicant a whose head office is in the United Kingdom; and b which is not an applicant to which section 5(1A) above applies, if it appears to the Treasury that any director, controller, manager or main agent of the applicant is not a fit and proper person to hold the position held by him. 4 In this section “ controller ”, in relation to the applicant, means— a a managing director of the applicant or of a body corporate of which the applicant is a subsidiary; b a chief executive of the applicant or of a body corporate, being an insurance company, of which the applicant is a subsidiary; c a person— i in accordance with whose directions or instructions the directors of the applicant or of a body corporate of which it is a subsidiary are accustomed to act, or ii who either alone or with any associate or associates is entitled to exercise, or control the exercise of, one-third 15 per cent or more of the voting power at any general meeting of the applicant or of a body corporate of which it is a subsidiary. 5 In this section “ manager ”, in relation to the applicant, means an employee of the applicant (other than a chief executive) who, under the immediate authority of a director or chief executive of the applicant— a exercises managerial functions, or b is responsible for maintaining accounts or other records of the applicant, not being a person whose functions relate exclusively to business conducted from a place of business outside the United Kingdom. 6 In this section “ main agent ”, in relation to the applicant, means, subject to such exceptions as may be prescribed, a person appointed by the applicant to be its agent in respect of general business in the United Kingdom, with authority to enter into contracts on behalf of the applicant in any financial year— a without limit on the aggregate amount of premiums; or b with a limit in excess of 10 per cent. of the premium limit as determined in accordance with Schedule 3 to this Act. 7 In this section “ chief executive ”, in relation to the applicant or a body corporate of which it is a subsidiary, means an employee of the applicant or that body corporate, who, either alone or jointly with others, is responsible under the immediate authority of the directors for the conduct of the whole of the insurance business of the applicant or that body corporate. 8 In this section “ associate ”, in relation to any person, means— a the wife or husband or minor son or daughter of that person; b any company of which that person is a director; c any person who is an employee or partner of that person; d if that person is a company— i any director of that company; ii any subsidiary of that company; iii any director or employee of any such subsidiary; and for the purposes of this subsection “ son ” includes step-son, “ daughter ” includes step-daughter and “ minor ”, in relation to Scotland, includes pupil. Applicants from other member States. 8 1 The Treasury shall not issue an authorisation under section 3 above to an applicant to which this section applies unless the applicant has a representative fulfilling the requirements of section 10 below. 2 The Treasury shall not issue an authorisation under section 3 above to an applicant to which this section applies if it appears to the Treasury that any relevant executive or main agent of the applicant is not a fit and proper person to hold the position held by him. 3 Where an applicant to which this section applies seeks an authorisation under section 3 above restricted to reinsurance business— a the Treasury shall not issue the authorisation unless they are atisfied that the applicant is a body corporate entitled under the law of that State to carry on insurance business there; and b subsection (2) above shall have effect as if the reference to any relevant executive were a reference to any person who is a director, controller or manager of the applicant or a person within paragraph (a) or (b) of subsection (4) below. 3A An applicant is one to which this section applies if— a its head office is in a member State other than the United Kingdom and it is not an EC company; or b its head office is in an EFTA State; or c its head office is in Switzerland and the authorisation sought by it is an authorisation to carry on general business which is not restricted to reinsurance business. 4 In this section “ relevant executive ” in relation to the applicant means a person who is— a the representative referred to in subsection (1) above or the individual representative referred to in section 10(5) below; b an officer or employee of the applicant who, either alone or jointly with others, is responsible for the conduct of the whole of the insurance business carried on by the applicant in the United Kingdom, not being a person who— i is also responsible for the conduct of insurance business carried on by the applicant elsewhere, and ii has a subordinate who is responsible for the whole of the insurance business carried on by the applicant in the United Kingdom; or c an employee of the applicant who, under the immediate authority of a director or of an officer or employee within paragraph (b) above,— i exercises managerial functions, or ii is responsible for maintaining accounts or other records of the applicant, not being a person whose functions relate exclusively to business conducted from a place of business outside the United Kingdom; and “ Controller ” “ manager ” “ main agent have ” have the same meaning as section 7 above . Applicants from outside the Community. 9 1 The Treasury shall not issue an authorisation under section 3 above in respect of long term or general business to an applicant to which this section applies unless the Treasury are satisfied— a that the applicant is a body corporate entitled under the law of the place where its head office is situated to carry on long term or, as the case may be, general business there; b that the applicant has in the United Kingdom assets of such value as may be prescribed; and c that the applicant has made a deposit of such amount and with such person as may be prescribed; but subject to subsection (2) and (3) below. 2 Where the applicant seeks to carry on insurance business in the United Kingdom and one or more other EEA States ,the Treasury and the supervisory authority in the other State or States concerned may agree that this subsection shall apply to the applicant; and in that event— a paragraph (b) of subsection (1) above shall have effect as if the reference to the United Kingdom were a reference to the EEA States concerned taken together; and b paragraph (c) of that subsection shall have effect as if the reference to such person as may be prescribed were a reference to such person as may be agreed between the Treasury and the other supervisory authority or authorities concerned. 3 Paragraph (c) of subsection (1) above shall not apply where the authorisation sought is one restricted to reinsurance. 4 The Treasury shall not issue an authorisation under section 3 above to an applicant to which this section applies unless the applicant has a representative fulfilling the requirements of section 10 below. 5 The Treasury shall not issue an authorisation under section 3 above which is restricted to reinsurance business to an applicant to which this section applies if it appears to the Treasury that— a the representative of the applicant referred to in subsection (4) above or the individual representative referred to in section 10(5) below, or b any director, controller or manager of the applicant, or c a main agent of the applicant, is not a fit and proper person to hold the position held by him. 5A An applicant is one to which this section applies if— a its head office is not in an EEA State; and b it is not an applicant to which section 8 above applies. 6 In this section “ controller ”, “ manager ” and “ main agent ” have the same meanings as in section 7 above, except that for the purposes of this section the controllers of the applicant shall be taken to include any officer or employee who, either alone or jointly with others, is responsible for the conduct of the whole of the insurance business carried on by the applicant in the United Kingdom, not being a person who— a is also responsible for the conduct of insurance business carried on by it elsewhere; and b has a subordinate who is responsible for the whole of the insurance business carried on by the applicant in the United Kingdom. 7 Regulations under this Act may make such provision as to deposits under this section as appears to the Treasury to be necessary or expedient, including provision for the deposits of securities instead of money, and, in relation to deposits with the Accountant General of the Supreme Court, provision applying (with or without modification) any of the provisions of the rules for the time being in force under section 38(7) of the Administration of Justice Act 1982. General representatives. 10 1 The requirements referred to in sections 8(1) and 9(4) above are those set out in the following provisions of this section. 2 The representative must be a person resident in the United Kingdom who has been designated as the applicant’s representative for the purposes of this section. 3 The representative must be authorised to act generally, and to accept service of any document, on behalf of the applicant. 4 The representative must not be an auditor, or a partner or employee of an auditor, of the accounts of any business carried on by the applicant. 5 If the representative is not an individual, it must be a company as defined in section 735 of the Companies Act or Article 3 of the Companies (Northern Ireland) Order 1986 with its head office in the United Kingdom and must itself have an individual representative resident in the United Kingdom who is authorised to act generally, and to accept service of any document, on behalf of the company in its capacity as representative of the applicant. Withdrawal of authorisation Withdrawal of authorisation in respect of new business. 11 1 The Treasury may, at the request of the company or on any grounds set out in subsection (2) below, direct that an insurance company authorised under section 3 or 4 above to carry on insurance business shall cease to be authorised to effect contracts of insurance, or contracts of any description specified in the direction. 2 The grounds referred to in subsection (1) above are— a that it appears to the Treasury that the company has failed to satisfy an obligation to which it is subject by virtue of this Act or the Financial Services Act 1986 or, if it is a member of a recognised self-regulating organisation within the meaning of that Act, an obligation to which it is subject by virtue of the rules of that organisation ; aa that the company is a UK company and it appears to the Treasury that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another EEA State which— i gives effect to the general or long term insurance Directives; or ii is otherwise applicable to the insurance activities of the company in that State; ab that the company is a UK or non-EC company and it appears to the Treasury that any of the criteria of sound and prudent management is not or has not been fulfilled, or may not be or may not have been fulfilled, in respect of the company. b that there exists a ground on which the Treasury would be prohibited by section 5(1B) or (1C), 7, 8 or 9 above from issuing an authorisation to the company; c that the company has ceased to be authorised to effect contracts of insurance, or contracts of a particular description, in a member State where it has its head office or where it has in accordance with section 9(2) above made a deposit. d that the company is a Swiss general insurance company which has ceased to be authorised to effect contracts of insurance, or contracts of a particular description, in Switzerland. 3 After giving a direction under this section otherwise than at the request of the company concerned the Treasury shall inform the company concerned of theirs reasons for giving the direction. 4 A direction under this section shall not prevent a company from effecting a contract of insurance in pursuance of a term of a subsisting contract of insurance. 5 Where a direction under this section has been given in respect of— a a company which has its head office, or has in accordance with section 9(2) above made a deposit, in a member State other than the United Kingdom; or b a Swiss general insurance company, the Treasury may revoke or vary the direction if after consultation with the supervisory authority in that member State or, as the case may be, in Switzerland the Treasury consider it appropriate to do so. 6 Subject to subsection (5) above a direction given under this section in respect of any insurance company may not be revoked or varied; but if the Treasury subsequently issue to the company under section 3 above an authorisation to carry on insurance business of a class to which the direction relates, the direction shall cease to have effect in relation to such business. 7 In this Act “Swiss general insurance company” means an insurance company— a whose head office is in Switzerland; b which is authorised under section 3 or 4 above to carry on general business; and c whose authorisation is not restricted to reinsurance business. Notices of withdrawal under section 11. 12 1 Before giving a direction under section 11 above otherwise than at the request of the company concerned the Treasury shall serve on the company a written notice stating— a that they are considering giving a direction and the ground on which they are considering it; and b that the company may, within the period of one month from the date of service of the notice, make written representations to the Treasury and, if the company so requests, oral representations to an officer of the Treasury appointed for the purpose by the Treasury . 2 Before giving a direction under section 11 above in respect of a company on either of the grounds set out in subsection (2A) below , the Treasury shall serve on the person whose fitness is in question a written notice stating— a that they are considering giving a direction on that ground; and b that the person on whom the notice is served may, within the period of one month from the date of service of the notice, make written representations to the Treasury and, if that person so requests, oral representations to an officer of the Treasury appointed for the purpose by the Treasury 2A The grounds referred to in subsection (2) above are— a that the company is a UK or non-EC company and it appears to the Treasury that the second or third criterion of sound and prudent management is or has not been fulfilled, or may not be or may not have been fulfilled, in respect of the company; and b that there exists a ground on which the Treasury would be prohibited by section 7(3), 8(2) or 9(5) above from issuing an authorisation to the company. 3 Subject to subsection (4) below, the Treasury shall consider any representations made in response to a notice under subsection (2) above before serving a notice under subsection (1) above. 4 Subsection (3) above shall not apply where the position held by the person on whom the notice under subsection (2) above is served, and whose fitness for that position is in question, is controller of a company. 5 A notice under subsection (1) or (2) above shall give particulars of the ground on which the Treasury are considering giving a direction. 6 Where representations are to be made in response to a notice under subsection (1) or (2) above, the Treasury shall take them into consideration before giving a direction. 7 Any notice to be served on a person under subsection (1) or (2) above may be served by post, and a letter containing the notice shall be deemed to be properly addressed if it is addressed to that person at his last known residence or last known place of business in the United Kingdom. 8 After giving a direction under section 11 above the Treasury shall publish notice of it in the London, Edinburgh and Belfast Gazettes and in such other ways as appear to the Treasury expedient for notifying the public. Suspension of authorisation in urgent cases. 12A 1 Where, in the case of a UK or non-EC company, it appears to the Treasury — a that one of the grounds in section 11(2) above exists in relation to the company: and b that the authorisation should be suspended as a matter of urgency, the Treasury may direct that the company shall forthwith cease to be authorised to effect contracts of insurance, or contracts of any description specified in the direction. 2 A direction under this section— a shall not prevent a company from effecting a contract of insurance in pursuance of a term of a subsisting contract of insurance; and b unless confirmed by the Treasury under subsection (6) below, shall cease to have effect at the end of the relevant period. 3 Where the Treasury gives a direction under this section, they shall forthwith serve on the company a written notice stating— a the ground on which the direction is given; and b that the company may, within the period of one month from the date of service of the notice, make written representations to the Treasury and, if the company so requests, oral representations to an officer of the Treasury appointed for the purpose by the Treasury . 4 Where the Treasury give a direction under this section on the ground set out in section 11(2)(ab) above, the Treasury shall forthwith serve on any person whose fitness is in question a written notice stating— a the ground for giving the direction; and b that the person on whom the notice is served may, within the period of one month from the date of service of the notice, make written representations to the Treasury and, if that person so requests, oral representations to an officer of the Treasury appointed for the purpose by the Treasury . 5 The Treasury shall consider any representations made in response to a notice under subsection (3) or (4) above before confirming a direction under this section. 6 At any time before the end of the relevant period, the Treasury may confirm a direction under this section by a written notice served on the company. 7 Where a direction under this section is so confirmed, it may not be revoked or varied; but if the Treasury subsequently issue to the company under section 3 above an authorisation to carry on insurance business of a class to which the direction relates, the direction shall cease to have effect in relation to such business. 8 In this section 'the relevant period’, in relation to a direction under this section, means the period of two months beginning with the date on which the direction is given. Final withdrawal of authorisation. 13 1 Where— a a UK company ceases to carry on insurance business or insurance business of any class in the European Community; or b an insurance company which is not a UK company ceases to carry on insurance business or insurance business of any class in the United Kingdom, the Treasury may direct that it shall cease to be authorised under section 3 or 4 above to carry on insurance business or insurance business of that class. 2 If— a a body authorised under section 3 above to carry on insurance business of any class has not at any time carried on insurance business of that class, and at least twelve months have elapsed since the issue of the authorisation; or b a body authorised under section 4 above to carry on insurance business of any class has not at any time since the commencement of this Act carried on business of that class, the Treasury may direct that the body shall cease to be authorised to carry on business of that class. 2A The Treasury may direct that an insurance company shall cease to be authorised to carry on business which is insurance business by virtue of section 95(c)(ii) of this Act if it appears to the Treasury that the company has failed to satisfy an obligation to which it is subject by virtue of the Financial Services Act 1986 or, if it is a member of a recognised self-regulating organisation within the meaning of that Act, an obligation to which it is subject by virtue of the rules of that organisation. 2B Subsections (3), (5) and (6) of section 11 and subsections (1) and (5) to (8) of section 12 above shall apply to a direction under subsection (2A) above as they apply to a direction under section 11. 3 A direction under this section is without prejudice to the subsequent issue of an authorisation to carry on insurance business of a class to which the direction relates. Offences Offences under Part I. 14 1 A person who carries on business in contravention of this Part of this Act shall be guilty of an offence. 2 A person who for the purpose of obtaining the issue of an authorisation furnishes information which he knows to be false in a material particular or recklessly furnishes information which is false in a material particular shall be guilty of an offence. 3 A person guilty of an offence under this section shall be liable— a on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or to both; b on summary conviction— i in England and Wales . . . , to a fine not exceeding £1,000 or, if it is greater, the prescribed sum within the meaning of section 32 of the Magistrates’ Courts Act 1980; ii in Scotland, to a fine not exceeding £1,000 or, if it is greater, the prescribed sum within the meaning of section 255(8)of the Criminal Procedure (Scotland) Act 1995 ; iii in Northern Ireland, to a fine not exceeding £1,000 or, if it is greater, the prescribed sum within the meaning of Article 4 of the Fines and Penalties (Northern Ireland) Order 1984. Part II Regulation of Insurance Companies Preliminary Insurance companies to which Part II applies. 15 1 Subject to the provisions of this section, this Part of this Act applies to— a all insurance companies, whether established within or outside the United Kingdom, which carry on insurance business within the United Kingdom; and b all UK companies which carry on business in a member State other than the United Kingdom. 1A Except as otherwise provided by Part I of Schedule 2F to this Act, this Part of this Act except— a sections 47A, 47B, 52A, 52B, 54 to 59 and Schedule 2B; and b section 49 and Schedule 2C so far as relating to the transfer of policies which evidence contracts of reinsurance, does not apply to an EC company in so far as it is carrying on insurance business through a branch in respect of which such of the requirements of Part I of Schedule 2F to this Act as are applicable have been complied with. 2 This Part of this Act does not apply to any insurance company which is registered under the enactments relating to friendly societies. 3 Where a trade union or an employers’ association carries on insurance business, this Part of this Act does not apply to it as an insurance company if the insurance business is limited to the provision for its members of provident benefits or strike benefits. In this subsection “trade union” and “employers’ association” have (throughout the United Kingdom) the meanings respectively assigned by section 1 and section 122(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 . 4 This Part of this Act does not apply to a member of Lloyd’s who carries on insurance business of any class provided that . . .the requirements set out in section 83 below and applicable to business of that class are complied with by or in respect of him . 5 This Part of this Act does not apply to a person by reason only that he carries on general business of class 14, 15, 16 , 17 or 18 in the course of carrying on, and for the purposes of, banking business. 6 This Part of this Act does not apply to an insurance company whose insurance business is restricted to general business consisting in the effecting and carrying out of contracts of such descriptions as may be prescribed, being contracts under which the benefits provided by the insurer are exclusively or primarily benefits in kind. Restriction of business to Insurance. 16 1 An insurance company to which this Part of this Act applies shall not carry on any activities, in the United Kingdom or elsewhere, otherwise than in connection with or for the purposes of its insurance business. 2 For the purposes of subsection (1) above any activities of an insurance company that are excluded from the definition of insurance business by section 95(c) (ii) below shall be treated as carried on in connection with its insurance business. Accounts and statements Annual accounts and balance sheets. 17 1 Every insurance company to which this Part of this Act applies shall, with respect to each financial year of the company, prepare a revenue account for the year, a balance sheet as at the end of the year and a profit and loss account for the year or, in the case of a company not trading for profit, an income and expenditure account for the year. 2 The contents of the documents required by subsection (1) above to be prepared shall be such as may be prescribed, but regulations may provide for enabling information required to be given by such documents to be given instead in a note thereon or statement or report annexed thereto or may require there to be given in such a note, statement or report such information in addition to that given in the documents as may be prescribed. 3 Regulation may, as respects such matters stated in such documents as aforesaid or in statements or reports annexed thereto as may be prescribed, require there to be given by such persons as may be prescribed and to be annexed to the documents certificates of such matters as may be prescribed. 4 If a form is prescribed— a for any such document as aforesaid or, b as that in which information authorised or required to be given in a statement or report annexed to any such document is to be given or, c for a certificate to be so annexed, the document shall be prepared, the information shall be given or, as the case may be, the certificate shall be framed, in that form. Periodic actuarial investigation of company with long term business. 18 1 Every insurance company to which this Part of this Act applies which carries on long term business— a shall, once in every period of twelve months, cause an investigation to be made into its financial condition in respect of that business by the person who for the time being is its actuary under section 19(1) below or any corresponding enactment previously in force; and b when such an investigation has been made, or when at any other time an investigation into the financial condition of the company in respect of its long term business has been made with a view to the distribution of profits, or the results of which are made public, shall cause an abstract of the actuary’s report of the investigation to be made. 2 An investigation to which subsection (1)(b) above relates shall include— a a valuation of the liabilities of the company attributable to its long term business; and b a determination of any excess over those liabilities of the assets representing the fund or funds maintained by the company in respect of that business and, where any rights of any long term policy holders to participate in profits relate to particular parts of such a fund, a determination of any excess of assets over liabilities in respect of each of those parts. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 For the purposes of any investigation to which this section applies the value of any assets and the amount of any liabilities shall be determined in accordance with any applicable valuation regulations. 5 The form and contents of any abstract . . . under this section shall be such as may be prescribed. Appointment of actuary by company with long term business. 19 1 Every insurance company to which this Part of this Act applies shall within one month of beginning to carry on long term business appoint an actuary as an actuary to the company; and whenever an appointment under this section or any corresponding enactment previously in force comes to an end the company shall as soon as practicable make a fresh appointment. 2 A company making an appointment under this section shall within fourteen days serve on the Treasury a written notice stating that fact and the name and qualifications of the person appointed; and if an appointment under this section or any corresponding enactment previously in force comes to an end the company shall within fourteen days serve on the Treasury a written notice stating that fact and the name of the person concerned. Annual statements by company with prescribed class of insurance business. 20 Classes of insurance business may be prescribed for the purposes of this section, and every insurance company to which this Part of this Act applies which carries on such business of a prescribed class shall annually prepare the prescribed statement of business of that class, being, if a form is prescribed for the statement, a statement in the prescribed form. Audit of accounts. 21 1 The accounts and balance sheets of every insurance company to which this Part of this Act applies shall be audited in the prescribed manner by a person of the prescribed description, and regulations made for the purposes of this section may apply to such companies the provisions relating to the audit of the accounts of companies under the Companies Acts , subject to such adaptations and modifications as may appear necessary or expedient. 2 In subsection (1) above the reference to accounts and balance sheets shall include a reference to any statement or report annexed thereto giving information authorised or required by virtue of section 17(2) above to be given in a statement or report so annexed. Communication by auditor with Secretary of State. 21A 1 No duty to which— a an auditor of an insurance company to which this Part of this Act applies; or b an auditor of any body with which a UK or non-EC company is closely linked by control who is also an auditor of the insurance company, may be subject shall be regarded as contravened by reason of his communicating in good faith to the Treasury or to the Secretary of State, whether or not in response to a request from them , any information or opinion on a matter of which the auditor has become aware in his capacity as auditor of that company or body and which is relevant to any functions of the Treasury or, as the case may be, Secretary of State under this Act 2 If it appears to the Treasury that any auditor or class of auditor to whom subsection (1) above applies is not subject to satisfactory rules made or guidance issued by a professional body specifying circumstances in which matters are to be communicated to the Treasury or the Secretary of State as mentioned in that subsection the Treasury may make regulations applying to that auditor or class of auditor and specifying such circumstances; and it shall be the duty of an auditor to whom the regulations made by the Treasury apply to communicate a matter to the Treasury or, as the case may be, the Secretary of State in the circumstances specified by the regulations. 3 The matters to be communicated to the Treasury or t h e Secretary of State in accordance with any such rules or guidance or regulations may include matters relating to persons other than the company. 4 No regulations shall be made under subsection (2) above unless a draft of them has been laid before and approved by a resolution of each House of Parliament. 5 If it appears to the Treasury that an auditor has failed to comply with the duty mentioned in subsection (2) above, the Treasury may disqualify him from being the auditor of an insurance company or any class of insurance company to which Part II of this Act applies; but the Treasury may remove any disqualification imposed under this subsection if satisfied that the person in question will in future comply with that duty. 6 An insurance company to which this Part of this Act applies shall not appoint as auditor a person disqualified under subsection (5) above. Deposit of accounts etc. with Secretary of State. 22 1 Every account, balance sheet, abstract or statement required by sections 17, 18 and 20 above and any report of the auditor of the company made in pursuance of section 21 above shall be printed, and the required copies of the document shall be deposited with the Treasury within six months after the close of the period to which the account, balance sheet, abstract, statement or report relates; but if in any case it is made to appear to the Treasury that the circumstances are such that a longer period than six months should be allowed, the Treasury may extend that period by such period not exceeding three months as they think fit. 1A In subsection (1) above, the reference to the required copies, in relation to a document, is to — a five printed copies of the document, or b one printed copy of the document and one copy of it in a form approved for the purposes of this subsection by the Treasury . 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 In the case of any document deposited under subsection (1) . . . above except an auditor’s report one of the printed copies, or, as the case may be, the printed copy, of the document shall be signed by such persons as may be prescribed. 4 In the case of any auditor’s report deposited under subsection (1) above one of the printed copies, or, as the case may be, the printed copy, of the report shall be signed by the auditor. 5 The Treasury shall consider the documents deposited under subsection (1) above, and if any such document appears to theTreasury to be inaccurate or incomplete in any respect the Treasury shall communicate with the company with a view to the correction of any such inaccuracies and the supply of deficiencies. 6 There shall be deposited with every revenue account and balance sheet of a company any report on the affairs of the company submitted to the shareholders or policy holders of the company in respect of the financial year to which the account and balance sheet relate. 7 In this section any reference to an account or balance sheet includes a reference to any statement or report annexed thereto giving information authorised or required by virtue of subsection (2) of section 17 above to be so given and any certificate so annexed by virtue of subsection (3) of that section. Right of shareholders and policy holders to receive copies of deposited documents. 23 1 Subject to subsection (2) below, an insurance company shall forward by post or otherwise to any shareholder or policy holder who applies for one— a a printed copy of any of the documents last deposited by the company under subsection (1) . . . of section 22 above; b a copy of any document supplied to the Treasury under subsection (5) of that section which relates to any of those documents; c a copy of any report deposited with any of those documents under subsection (6) of that section. 2 If, in the opinion of the Treasury , the disclosure of information contained in— a a statement or report annexed to a document prepared in pursuance of section 17(1) above by an insurance company; or b a statement prepared in pursuance of section 20 above by such a company, would be harmful to the business of the company or of any of its subsidiaries, the Treasury may dispense the company from complying with the obligation imposed by subsection (1) above to forward a copy of the document containing the information to a shareholder or policy holder who applies for it. Deposit of accounts etc. by registered society. 24 1 A registered society shall, in addition to depositing with the Treasury , as required by section 22 above, . . . copies of each document to which subsection (1) of that section applies deposit, within the time limited by virtue of that section for depositing them, a copy with the appropriate registrar in the case of a society registered in Great Britain or with the registrar in the case of a society registered in Northern Ireland, being a copy signed by the like persons as those by whom the copies deposited under that section are required to be signed. 2 Subsection (6) of the said section 22 shall have effect in relation to the deposit by virtue of this section of accounts and balance sheets as it has effect in relation to the deposit by virtue of that section of accounts and balance sheets. 3 Section 71(1) of the Industrial and Provident Societies Act 1965 (which empowers the Treasury to make regulations respecting, among other things, the inspection of documents kept by the appropriate registrar under that Act) and section 97(1) of the Industrial and Provident Societies Act (Northern Ireland) 1969 (which confers corresponding powers on the Department of Commerce for Northern Ireland) shall have effect as if the reference to documents kept by the appropriate registrar under that Act of 1965 or, as the case may be, by the registrar under that Act of 1969 included a reference to documents deposited in pursuance of this section. 4 In this section “ appropriate registrar ” has the meaning given in section 73(1) of the said Act of 1965 and “ registrar ” has the meaning given by section 101(1) of the said Act of 1969. Periodic statements by company with prescribed class of business. 25 1 Every insurance company to which this Part of this Act applies which carries on business of a class or description prescribed for the purposes of this section shall prepare, at such intervals and for such periods as may be prescribed, a statement of its business of that class or description. 2 The form and contents of any statement under this section shall be such as may be prescribed. 3 Regulations may, as respects such matters contained in a statement under this section as may be prescribed, require there to be given by such persons as may be prescribed and to be annexed to the statement certificates of such matters and in such form as may be prescribed. 4 Five copies of any statement made under this section (with any certificate annexed thereto in pursuance of subsection (3) above) shall be deposited by the company with the Treasury within such period as may be prescribed, and one of those copies shall be a copy signed by the persons required to sign copies of statements made under section 20 above which are deposited under section 22 above. 5 The whole or any part of any document deposited under subsection (4) above may be deposited by the Treasury with the registrar of companies or with the registrar of companies in Northern Ireland or with both and may be published by the Treasury in such ways as they think appropriate. Statements of transactions of prescribed class or description. 26 1 Classes or descriptions of agreements or arrangements appearing to the Treasury as likely to be undesirable in the interests of policy holders may be prescribed for the purposes of this section, and every insurance company to which this Part of this Act applies or subordinate company within the meaning of section 31 below of any such company which enters into an agreement or arrangement of a class or description so prescribed shall, within such period as may be prescribed, furnish the Treasury with a statement containing such particulars of that agreement or arrangement as may be prescribed. 2 Different classes or descriptions of agreements or arrangements may be prescribed for the purposes of this section in relation to companies of different classes or descriptions. 3 The whole or any part of any statement furnished to the Treasury under this section may be deposited by them with the registrar of companies or with the registrar of companies in Northern Ireland or with both and may be published by the Treasury in such ways as they think appropriate. Companies from outside the Community. 27 An insurance company to which this Part of this Act applies a whose head office is not in a member State; and b which is not a Swiss general insurance company, shall keep in the United Kingdom proper accounts and records in respect of insurance business carried on in the United Kindgom. Assets and liabilities attributable to long term business Separation of assets and liabilities attributable to long term business. 28 1 Where an insurance company to which this Part of this Act applies carries on ordinary long-term insurance business or industrial assurance business or both of those kinds of insurance business— a the company shall maintain an account in respect of that business or, as the case may be, each of those kinds of business; and b the receipts of that business or, as the case may be, of each of those kinds of business shall be entered in the account maintained for that business and shall be carried to and form a separate insurance fund with an appropriate name. 2 An insurance company to which this Part of this Act applies which carries on ordinary long-term insurance business or industrial assurance business or both of those kinds of business shall maintain such accounting and other records as are necessary for identifying— a the assets representing the fund or funds maintained by the company under subsection (1)(b) above (but without necessarily distinguishing between the funds if more than one); and b the liabilities attributable to that business or, as the case may be, each of those kinds of business. Application of assets of company with long term business. 29 1 Subject to subsections (2) and (4) and section 55(3) below, the assets representing the fund or funds maintained by an insurance company in respect of its long term business— a shall be applicable only for the purposes of that business, and b shall not be transferred so as to be available for other purposes of the company except where the transfer constitutes reimbursement of expenditure borne by other assets (in the same or the last preceding financial year) in discharging liabilities wholly or partly attributable to long term business. 2 Where the value of the assets mentioned in subsection (1) above is shown, by an investigation to which section 18 above applies or which is made in pursuance of a requirement imposed under section 42 below, to exceed the amount of the liabilities attributable to the company’s long term business the restriction imposed by that subsection shall not apply to so much of those assets as represents the excess. 3 Subsection (2) above shall not authorise a transfer or other application of assets by reference to an actuarial investigation at any time after the date when the abstract of the actuary’s report of the investigation has been deposited with the Treasury in accordance with section 22(1) above or section 42(4) below. 4 Nothing in subsection (1) above shall preclude an insurance company from exchanging, at fair market value, assets representing a fund maintained by the company in respect of its long term business for other assets of the company. 5 Any mortgage or charge (including— a a charge imposed by a court on the application of a judgment creditor, b in Scotland, a charge imposed by way of diligence, and c a charge imposed by the Enforcement of Judgments Office in Northern Ireland) shall be void to the extent to which it contravenes subsection (1) above. 6 Money from a fund maintained by a company in respect of its long term business may not be used for the purposes of any other business of the company notwithstanding any arrangement for its subsequent repayment out of the receipts of that other business. 7 No insurance company to which this Part of this Act applies, and no company of which any such insurance company is a subsidiary, shall declare a dividend at any time when the value of the assets representing the fund or funds maintained by the insurance company in respect of its long term business, as determined in accordance with any applicable valuation regulations, is less than the amount of the liabilities attributable to that business as so determined. Allocations to policy holders. 30 1 Where in the case of an insurance company to which this Part of this Act applies— a there is an established surplus in which long term policy holders of any category are eligible to participate, and b an amount has been allocated to policy holders of that category in respect of a previously established surplus in which policy holders of that category were eligible to participate, the company shall not by virtue of section 29(2) above transfer or otherwise apply assets representing any part of the surplus mentioned in paragraph (a) above unless the company has either allocated to policy holders of that category in respect of that surplus an amount not less than the relevant minimum, or complied with the requirements of subsection (3) below and made to those policy holders any allocation of which notice is given under paragraph (a) of that subsection. 2 Subject to subsections (6) and (7) below, the relevant minimum is the amount represented by the formula b x c a - c 200 where— a is the last previously established surplus in respect of which an amount was allocated to policy holders of the category in question; b is the amount so allocated; and c is the surplus referred to in subsection (1)(a). 3 The requirements of this subsection are that the company— a has served on the Treasury a written notice stating that it proposes to make no allocation or an allocation of an amount (specifying it) which is smaller than the relevant minimum; and b has published a statement approved by the Treasury in the London, Edinburgh and Belfast Gazettes and in such other ways as the Treasury may have directed, and that a period of not less than fifty-six days has elapsed since the date, or the last date, on which the company has published the statement mentioned in paragraph (b) above as required by or under that paragraph. 4 In this section “ established surplus ” means an excess of assets representing the whole or a particular part of the fund or funds maintained by the company in respect of its long term business over the liabilities, or a particular part of the liabilities, of the company attributable to that business as shown by an investigation to which section 18 above applies or which is made in pursuance of a requirement imposed under section 42 below. 5 For the purposes of this section an amount is allocated to policy holders if, and only if— a bonus payments are made to them; or b reversionary bonuses are declared in their favour or a reduction is made in the premiums payable by them; and the amount of the allocation is, in a case within paragraph (a) above, the amount of the payments and, in a case within paragraph (b) above, the amount of the liabilities assumed by the company in consequence of the declaration or reduction. 6 For the purposes of this section the amount of any bonus payments made in anticipation of an established surplus shall be treated as an amount allocated in respect of the next established surplus in respect of which an amount is allocated to eligible policy holders generally; and for the purposes of sub-section (2) above the amount of any surplus in respect of which such an allocation is made shall be treated as increased by the amount of any such payments. 7 Subsection (1) above shall not authorise the application for purposes other than those mentioned in section 29(1) above of assets representing any part of the surplus mentioned in sub-section (1)(a) above which the company has decided to carry forward unappropriated; and for the purposes of subsection (2) above the amount of any surplus sha