The UK P&I Club has announced that it is reorganizing its structure to establish UK Europe as the sole provider of direct insurance to UK Club members.
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.
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 reinsurer of UK Europe. It will continue to be the holding company controlled by the Club’s Members – i.e., those ship-owners whose vessels are insured by the Club.
The reorganization 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 in February, 2013, and so does not impact Members in the 2012 policy year.
The valued relationships between Members, the Club and its Managers will continue unchanged, as will the scope of services provided.
At the present time, many Members are insured directly by UK Bermuda through its respective branches in the UK, Hong Kong, Singapore, and Japan. However, a substantial number of Members 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).
Under the new structure UK Bermuda will cease to write direct insurance business. Its existing direct business will be transferred to UK Europe. 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 Financial Services and Markets Act 2000 in the UK. 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 transfer of liabilities of the other branches will be supervised by their local Asian regulatory authorities.