A Guide to Reinsurance Law
FORMATION OF REINSURANCE AGREEMENTS
AUTHORISATION OF REINSURERS
The authorisation requirement
The Financial Services and Markets Act 2000 regulates the supply of financial services in the UK market. Any person who wishes to carry on a regulated activity in the UK as a principal must be authorised to do so by the Financial Services Authority (section 19), and an authorised person may only carry on a regulated activity in respect of which the authorisation applies (section 20). Contravention of the “general prohibition” in section 19 is a criminal offence, although contravention of section 20 does not attract criminal sanctions. An insurer which is established and authorised elsewhere in the EEA does not require authorisation by the Financial Services Authority and may take advantage of EEA passport rights by either forming an establishment in the UK or supplying insurance directly to customers in the UK from establishments elsewhere in the EEA. Equally, an insurer which is authorised and established in the UK has equivalent passport rights to establish, or to sell insurance directly, in any other EEA country, without having to seek authorisation from that country’s regulatory authorities (Financial Services and Markets Act 2000, schedule 3, and the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001, S.I. 2001 No. 2511).