Insurers often wish to transfer portfolios of insurance contracts, either to another insurer in the same group in the course of a restructuring; or to a third party insurer (typically where the transferor wishes to exit a particular market).
In the UK, Part VII of the Financial Services and Markets Act 2000 (“Part VII”) permits the transfer of insurance business subject to the sanction of the High Court. Transfers can be made to transferees located within the UK or in other EEA member states. Part VII imposes safeguards to protect the policyholders whose policies are to be transferred. Once the statutory requirements are met, the High Court has discretion to order the transfer. Importantly, the transferor does not need to first obtain the consent of the affected policyholders, since the High Court’s order takes effect as a form of statutory novation.