General issues for insurers

Legislation relevant to insurance insolvency

Insolvency laws generally make special provisions for insurance companies because of the regulated status of the industry and the importance of insurance to the economy. The Financial Services and Markets Act 2023 amends the UK’s insolvency arrangements for insurers in order to clarify certain elements, and to expand the protections available to an insurer and its policyholders undergoing insolvency or write-down procedures (see Practice Note: The Financial Services and Markets Act 2023—essentials).

Insolvency procedures available to insolvent insurance companies

The regulators (the Prudential Regulation Authority and the Financial Conduct Authority) must be involved in insolvency-related proceedings against financial services firms (see Practice Note: Financial services firms and insolvency provisions in FSMA 2000).

The following insolvency procedures can be used by an insurance company:

•
liquidation (see: Members’ voluntary liquidation—overview, Creditors' voluntary liquidation (CVL)—overview and Compulsory liquidation—overview), including the appointment of a provisional liquidator
•
administration (see: Administration—overview)
•
company voluntary arrangement (see: Company Voluntary Arrangement—overview)

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