• PINS Chapter 12 PINS Chapter 12 Insurers in run-off

    Editorial changes (as from 1 January 2015).

    • PINS Part 12.1 PINS Part 12.1 Application and purpose

      Editorial changes (as from 1 January 2015).

      • PINS 12.1.1 Application of Chapter 12

        This Chapter applies to:

        (a) every QFC incorporated insurer (other than a QFC captive insurer); and
        (b) every branch in respect of its QFC insurance business operations.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.1.2 Meanings of terms relating to run-off

        In this Chapter:

        (a) an insurer in run-off means an insurer that has ceased to effect contracts of insurance in respect of the whole or a category of its insurance business (or, in the case of a branch, the whole or a category of its QFC insurance business), and a takaful fund in run-off and a long term insurance fund in run-off are construed accordingly; and
        (b) going into run-off or placing insurance business into run-off means ceasing to effect contracts of insurance, and placing a takaful fund or a long term insurance fund into run-off are construed accordingly.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.1.3 PINS 12.1.3 Compliance with Chapter 12 by insurer directed to go into run-off

        An insurer in run-off by virtue of a decision or notice of the Regulatory Authority to the effect that the insurer is to cease to effect contracts of insurance shall comply with this Chapter except to the extent the Regulatory Authority acting under its powers in the FSR directs otherwise.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.1.3 Guidance

          1. The purpose of this Chapter is to set out prudential provisions applying to insurers that cease to effect insurance business, either wholly or in respect of a particular category. The provisions are also applicable to Cells, takaful funds and long term insurance funds, but do not (because of the effect of PINS Rule 12.1.2) apply to non-QFC insurance business of a branch.
          2. An insurer may be in run-off because of a decision or notice of the Regulatory Authority under its powers in the FSR requiring an insurer to cease to effect certain contracts of insurance.
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

      • PINS 12.1.4 PINS 12.1.4 Certain contracts to be disregarded

        For the purposes of this Chapter, in determining whether an insurer is effecting contracts of insurance, or has ceased to effect contracts of insurance, including contracts of insurance effected through a takaful fund or a long term insurance fund, contracts of insurance effected under a term of an existing contract of insurance will be ignored unless the Regulatory Authority decides otherwise in respect of any particular contract.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.1.4 Guidance

          The effect of PINS Rule 12.1.4 is to disregard, for the purposes of determining whether the Chapter applies, contracts of insurance that are effected by the insurer as a consequence of a term of an existing contract of insurance. A contract will normally only be regarded as being effected under a term of an existing contract if the insurer does not have discretion to decline to effect the new contract or if it would be unreasonable for the insurer, having regard to the interests of the policyholder, to decline to effect it.

          Editorial changes (as from 1 January 2015).

    • PINS Part 12.2 PINS Part 12.2 Insurers ceasing to effect contracts of insurance in a category

      Editorial changes (as from 1 January 2015).

      • PINS 12.2.1 Application of Part 12.2

        This Part applies to an insurer that ceases or decides to cease to effect new or to renew contracts of insurance:

        (a) in a category in which the insurer has previously effected insurance business; or
        (b) in respect of a takaful fund or a long term insurance fund, in a category in which the insurer has previously effected insurance business through that takaful fund or long term insurance fund.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.2.2 Insurers to give notice of decision to cease business

        An insurer to which this Part applies must, within 28 days of a decision to cease to effect new contracts of insurance in a category, notify the Regulatory Authority of its decision, in a notice specifying the following details:

        (a) the effective date of the decision to cease effecting contracts of insurance;
        (b) the category to which the decision relates;
        (c) where relevant, the takaful fund or long term insurance fund to which the decision relates.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.2.3 Insurers in run-off not to effect certain contracts

        An insurer who has provided a notice to the Regulatory Authority in accordance with PINS Rule 12.2.2 must not effect any contracts of insurance in that category without the written permission of the Regulatory Authority. Where the notice referred to in PINS Rule 12.2.2 relates to a takaful fund or long term insurance fund of the insurer, the restriction set out in this rule applies only to that takaful fund or long term insurance fund.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS Part 12.3 PINS Part 12.3 Run-off plans

      Editorial changes (as from 1 January 2015).

      • PINS 12.3.1 Application of Part 12.3

        This Part applies to:

        (a) Insurers that go into, or are in, run-off, or that maintain takaful funds or long term insurance funds that are in run-off;
        (b) Insurers that make a decision to go into run-off or to place a takaful fund or long term insurance fund into run-off; and
        (c) Insurers whose authorisation to effect contracts of insurance in respect of their entire insurance business or in respect of the entire business of a takaful fund or long term insurance fund is withdrawn by the Regulatory Authority.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.3.2 Insurer voluntarily in run-off to provide run-off plan

        If an insurer decides to go into run-off or to place a takaful fund or a long term insurance fund into run-off, the insurer must, at the same time as the notice referred to in PINS Rule 12.2.2, provide the Regulatory Authority with a written run-off plan in respect of the insurance business being placed into run-off.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.3.3 Insurer directed to go into run-off to provide run-off plan

        If the Regulatory Authority withdraws an insurer's authorisation to effect contracts of insurance in respect of the insurer's whole, or a category of, insurance business or the whole, or a category of, insurance business of a takaful fund or long term insurance fund, the insurer must, within 28 days after the day the insurer is given the written notice of withdrawal of authorisation (or, if later, the period specified in that notice), provide the Regulatory Authority with a written run-off plan in respect of that insurance business.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.3.4 What run-off plans must cover

        An insurer must ensure a run-off plan provided to the Regulatory Authority in accordance with this Part covers the period until all liabilities to policyholders relating to the insurance business in run-off are met and includes:

        (a) an explanation of how, or the extent to which, all liabilities to policyholders will be met in full as they fall due;
        (b) an explanation of how, or the extent to which, the insurer will maintain its compliance with the requirements of PINS until such time as all liabilities to policyholders are met;
        (c) a description, appropriate to the scale and complexity of the insurer's business, of the insurer's business strategy;
        (d) financial projections showing, in a form appropriate to the scale and complexity of the insurer's operations, the forecast financial position of the insurer as at the end of each reporting period during the period to which the run-off plan relates;
        (e) an assessment of the sensitivity of the financial position of the insurer to stress arising from realistic scenarios relevant to the circumstances of the insurer;
        (f) details of the planned run-off reinsurance protections and the extent to which the planned reinsurance protections match the run-off realistic scenarios;
        (g) details of the claims handling and reserving strategy; and
        (h) details of the cost of the management of the run-off.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.3.5 Application of run-off plan to fund

        Where an insurer's insurance business in run-off relates to a takaful fund or a long term insurance fund of that insurer, the run-off plan must deal with the matters set out in PINS Rule 12.3.4 so far as they relate to that takaful fund or long term insurance fund.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 12.3.6 PINS 12.3.6 Insurer to monitor run-off plan etc

        (1) This rule applies to an insurer that has given a run-off plan to the Regulatory Authority.
        (2) The insurer must monitor the matters provided in the run-off plan.
        (3) If there is a significant departure from the run-off plan, the insurer must tell the Regulatory Authority immediately, but by no later than the second business day after the day the departure happens or starts.
        Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 12.3.6 Guidance

          An insurer should decide whether a matter constitutes a significant departure from a run-off plan, having regard to the nature and scale of the matter and its materiality relative to the scale and complexity of the insurer and, where relevant, the scale and complexity of the takaful fund or long term insurance fund concerned. The following matters will normally be considered as representing a significant departure from a run-off plan:

          a. a significant revision of the insurer's strategy for managing risks, and in particular its strategy for the use of reinsurance;
          b. a significant deterioration in the insurer's claims experience, financial position or solvency position (the amount by which the insurer's eligible capital, determined in accordance with the provisions of PINS chapter 4 relevant to that insurer, exceed the insurers minimum capital requirement as calculated by the provisions in PINS chapter 3);
          c. any other transaction or circumstance that is likely to have a material effect upon the insurer's solvency position.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 12.3.7 Regulatory Authority may direct insurer to amend run-off plan

        Where an insurer has notified a matter to the Regulatory Authority in accordance with PINS Rule 12.3.6, the Regulatory Authority may by notice in writing require the insurer to provide an amended run-off plan. The insurer must provide an amended run-off plan within 28 days of receipt of the notice, unless the notice specifies a longer period.

        Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS Part 12.4 PINS Part 12.4 Provisions in respect of contracts relating to insurance business in run-off

      Editorial changes (as from 1 January 2015).

      • PINS 12.4.1 Application — pt 12.4

        This Part applies only to an insurer that:

        (a) is in run-off as regards its entire insurance business or the entire insurance business of a takaful fund or long term insurance fund;
        (b) has provided a notice to the Regulatory Authority in accordance with PINS Rule 12.2.2 in respect of its entire insurance business or the entire insurance business of a takaful fund or long term insurance fund; or
        (c) has received a written notice from the Regulatory Authority withdrawing the insurer's authorisation to effect contracts of insurance in respect of its entire insurance business or the entire insurance business of a takaful fund or long term insurance fund.
        Editorial changes (as from 1 January 2015).

      • PINS 12.4.2 Insurer with business in run-off to notify authority of certain contracts

        (1) An insurer to which this Part applies must—
        (a) within 10 business days after the day its insurance business enters into run-off, tell the Regulatory Authority about the existence and principal features of any notifiable contract that existed at the time the business entered into runoff; and
        (b) within 10 business days after the day it enters into a notifiable contract in relation to its insurance business in runoff, tell the Regulatory Authority about the existence and principal features of the contract.
        (2) To remove any doubt, subrule (1) (b) applies whether or not the insurance business is conducted through a takaful fund or long term insurance fund that is in run-off.
        (3) In this rule:

        notifiable contract means—
        (a) a contract with a person related to the insurer, other than a contract of insurance effected by the insurer before going into run-off;
        (b) a contract with any person relating to the management of all or any of the insurance business in run-off;
        (c) a contract with any person for reinsurance of all or any of the insurance business in run-off; or
        (d) any other contract with a person mentioned in paragraph (b) or (c) or a person related to such a person.
        Editorial changes (as from 1 January 2015).

      • PINS 12.4.3 Request for additional information about contract notified under r 12.4.2

        (1) The Regulatory Authority may, by written notice given to an insurer that has notified the authority about a contract under rule 12.4.2, require the insurer to give the authority, within a stated reasonable period, additional information about the contract.
        (2) The insurer must comply with the requirement.
        (3) The power given by subrule (1) is additional to the Regulatory Authority's other powers.

        Note See eg Financial Services Regulations, art 48 (Power to obtain documents and information).
        Amended by QFCRA RM/2012-5 (as from 1st July 2013).

    • PINS Part 12.5 PINS Part 12.5 Limitations on distributions by QFC incorporated insurers in run-off

      Editorial changes (as from 1 January 2015).

      • PINS 12.5.1 Insurer in run-off not to make distributions

        (1) An insurer incorporated in the QFC in run-off must not make any distribution to shareholders or members of the insurer, whether by way of dividends or otherwise, or any payment of management fees (other than fees payable under a contract notified to the Regulatory Authority in accordance with PINS Rule 12.4.2), without the written consent of the Regulatory Authority.
        (2) Any such distribution or return of capital or payment of management fees must be made within the period, if any, specified in the written notice of consent given by the Regulatory Authority.
        Amended by QFCRA RM/2015-3 (as from 1st January 2016).