§ Mr. BatisteTo ask the President of the Board of Trade if he has completed his review of the Policyholders Protection Act 1975; and if he will make a statement. [39328]
§ Mr. LangFollowing publication of the consultative document "A Review of the Policyholders Protection Act 1975" in July 1994, there has been general support, both from insurers and policyholder interests, for changes in the scope and operations of the Policyholders Protection Act. I have therefore concluded that the Act requires amendment. The amendments will require primary legislation, which I will bring forward when parliamentary time permits.
The principal change which I propose to make is to the Act's geographic coverage. I propose to restrict it to insurance policies covering European Economic Area risks and commitments underwritten by United Kingdom authorised companies and UK risks and commitments underwritten by UK-located branches of EEA companies. I also intend to extend the Act's scope, subject to de minimis provisions, to include insurance policies covering UK risks which have been underwritten on a services basis by companies based elsewhere in the EEA.
I also propose to restrict the coverage of partnerships, which are currently treated more favourably under the Act than incorporated companies. I propose to put them on an equal footing by restricting compensation to partnerships and incorporated companies alike only to compulsory insurance classes.
Neither of these proposals will be retrospective: they will apply to payments by the Policyholders Protection Board triggered by any insurance failure after enactment of the proposals.
I also propose to make a number of minor changes to the Act which have been suggested during the review to improve the operation of the Act, to improve protection for insureds who are not policyholders and to reduce the Policyholders Protection Board's administrative costs.
Full details of the proposed changes are contained in a document which I have placed in the Library of the House.