§ Lord Desaiasked Her Majesty's Government:
Whether, in the event of the insolvency of Lloyd's of London, the Secretary of State for Trade and Industry has powers under the provisions of the Insurance Companies Act 1982
- (a) to deem individual Names at Lloyd's to be insurance companies and, without writ or similar action through the courts, to require assets belonging to individual Names to be placed in trust to the extent of their indebtedness to Lloyd's, which assets could not be released from trust without the consent of the Secretary of State; and
- (b) to require any information and documents to be produced by Names to the extent that it should appear to be necessary for the protection of policyholders, including policyholders in the United States of America; and whether this
WA 26 action would relate only to the liability of individual Names or whether it could be applied to all Names to the extent that assets might be needed to meet the liabilities of those Names at Lloyd's who had no assets to meet their own liabilities.
§ Lord InglewoodAn individual Name who fails to demonstrate solvency, in the sense that the solvency certificate required pursuant to Section 83(4) of the Insurance Companies Act 1982 had not been furnished, would cease to be exempt from Part II of the Act. Such a Name would then become subject to regulation by the Secretary of State, in accordance with Part II, as an insurance company (defined in Section 96(1) of the Act as a person or body of persons (whether incorporated or not) carrying on insurance business). As such he/she could, in accordance with the grounds set cut in Section 37, be required,inter alia, by the Secretary of State, (in accordance with Sections 39 and 40, without recourse to the courts) to maintain specified assets in the UK, and place them in trust. He/she might also (in accordance with Section 44) be required to furnish information and produce documents, and (in accordance with Section 45) be required to take other actions for the protection of policyholders. The extent to which these and all other powers provided by Part II might be exercised in any instance would depend on the circumstances of the case.
In the event of Lloyd's ceasing to be solvent, in the sense that the members of Lloyd's taken together had failed to maintain the margin of solvency prescribed pursuant to Section 84(1) of the Act, specified powers of intervention set out in Part II of the Act, (namely Sections 38–41, 44 and 45) would become exercisable in relation to the members of Lloyd's. The extent to which the powers would be exercised would depend on the prevailing circumstances.