UK P&I Club restructures to offer one European provider for Britain

2012 03 27

THE UK P&I Club is reorganising its structure to establish UK Europe as the sole provider of direct insurance to UK Club members.

Under the new structure, the Bermuda-based UK Club will cease to write direct insurance business. Its existing direct business will transfer to UK Europe. UK Bermuda will become the re-insurer of UK Europe. It will continue to be the holding company controlled by the club's members, who are shipowners with vessels insured by the Club, the association announced.

By reducing the number of separately regulated insurers from two to one, the UK Club aims to streamline governance, reduce compliance costs and manage more efficiently the club's solvency capital requirements while meeting the impending Solvency 2 regulations for insurers in the European Union.

Solvency II is an EU Insurance Directive which will replace Solvency I, the current Insurance Directive which has been in place since 2002. It governs the amount of regulatory capital an insurance undertaking is obliged to hold against unforeseen events, otherwise known as the solvency margin.

The reorganisation will not affect UK Club members' terms of entry, cover or premium. They will continue to be members of UK Bermuda but will be insured by UK Europe.

The new structure will take effect from February 2013 and so does not impact members in the 2012 policy year.

At present, many members are insured directly by UK Bermuda through its respective branches in the UK, Hong Kong, Singapore, and Japan. However, a substantial number are insured by the wholly-owned subsidiary, UK Europe. Both UK Bermuda and UK Europe are reinsured by the UK Club's wholly-owned subsidiary International P&I Reinsurance Company (IPIR).

UK Bermuda will continue to be the holding company, controlled by its members, and will also become the reinsurer of UK Europe. IPIR will cease underwriting while UK Europe will establish new branches in Hong Kong, Japan and Singapore.

The transfer of liabilities from UK Bermuda to the head office UK Europe will be carried out by a legal process known as a Part VII transfer under the terms of the UK Financial Services and Markets Act 2000. Under the terms of the act, the transfer process is supervised by the English High Court together with the UK Financial Services Authority and an appointed "independent expert".

The Bermuda Supreme Court has a supervisory role in the transfer of interests. In addition, the local Asian regulatory authorities will supervise the transfer of liabilities of the other branches.

Source Shipping Gazette - Daily Shipping News

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