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This updates our December 22, 2008 blog, and other related postings.  In December 2008, the U.S. Securities and Exchange Commission (the “SEC”) adopted Rule 151A (the “Rule”) classifying equity-indexed annuities (“EIAs”) as securities, and subjecting them to federal regulation effective 2011.  The Rule has been hotly debated, as some believe that EIAs are adequately regulated by states and that federal regulation would only result in additional costs in registering and selling the products. …
Read More Financial Reform Package Preserves the Role of State Insurance Departments in Regulating Indexed Annuities

On 25 June 2010, the Securities and Futures Commission of Hong Kong (the SFC) published the new SFC handbook (the Handbook), which came into immediate effect. The Handbook was one of the introductions suggested in the Consultation Conclusions on Proposals to Enhance Protection for the Investing Public, published on 28 May 2010. The Handbook includes revised product codes for unit trusts and mutual funds and for investment-linked assurance schemes in addition to a new product code for unlisted structured investment products. …
Read More Hong Kong: Securities and Futures Commission Publishes New Handbook

On 8 July, the Financial Services Authority (FSA) banned Timothy Higgins, Clifford Felstead and Ralph Brunswick (who were found guilty in June 2008 of conspiring to defraud Markel, QBE and Amalfi Underwriting) from working in regulated financial services. The FSA delivered the prohibition because the behaviour of the individuals posed a severe risk to confidence in the financial markets and to assist in reducing financial crime. …
Read More UK: Financial Services Authority Bans Three Individuals who Defrauded Insurers Through Coverholder Arrangements

On 14 July 2010, the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) published its draft advice on equivalence assessments to be undertaken in relation to three areas of the Solvency II directive, being reinsurance, group supervision and group solvency. CEIOPS proposes that in its first wave of assessments, Bermuda and Switzerland should be considered for equivalence in all of these areas and Japan in respect of reinsurance only. …
Read More Solvency II – Bermuda and Switzerland in Line for First Equivalency Assessments

The National Flood Insurance Program (“NFIP”) expired on May 31, 2010 and, for the third time this year, the NFIP lapsed for a month.  On July 1, 2010 the NFIP was reauthorized retroactive to June 1, 2010 and this reauthorization will expire on September 30, 2010. …
Read More National Flood Insurance Program Reinstated by Temporary Extension

On 30 June 2010, the UK’s Financial Services Authority (FSA) and Financial Reporting Council (FRC) published a joint discussion paper (DP) entitled “Enhancing the auditor’s contribution to prudential regulation”.
Read More UK: Financial Services Authority and Financial Reporting Council Publish Discussion Paper on Auditors’ Role in Prudential Regulation

On 6 July 2010, Lloyd’s issued Market Bulletin Y4408 (click here to see a copy of the bulletin) clarifying the reporting requirements of managing agents who underwrite broker errors and omissions (E&O) insurance. These requirements were issued in April 2010 by Market Bulletin Y4390 (click here to see a copy of the bulletin). …
Read More UK: Lloyd’s Regulates Conflict of Interest for Underwriters of Broker E&O Insurance