Insurance regulatory updates
Hong Kong
Singapore
The Monetary Authority of Singapore (MAS) has issued a set of legally binding requirements to raise the cyber security standards and strengthen cyber resilience of the financial sector. – Notice on Cyber Hygiene sets out the measures that financial institutions must take to mitigate the growing risk of cyber threats.
Australia
ASIC has updated its regulatory guidance on the operation of the Markets Disciplinary Panel – The MDP, which acts through a Division of ASIC, is a peer review panel that makes decisions about whether infringement notices should be given for alleged contraventions of the market integrity rules.
ASIC has updated Regulatory Guide 216 Markets Disciplinary Panel to simplify and streamline the MDP’s policies and procedures.
India
China
China’s banking and insurance regulator, the China Banking and Insurance Regulatory Commission (CBIRC) has issued interim measures aiming to strengthen management and supervision of insurance assets and liabilities.
The People’s Bank of China has set out draft rules which will set out entry thresholds for non-financial firms’ holdings in financial services firms. Newly published regulatory requirements:non-financial companies which have two or more kinds of financial business – such as insurance, banking, securities brokerage, trusts, asset management and financial leasing – will have to apply for a financial holding company license within six months of the new regulation; in addition they must have more than Rmb5 billion (US$726.7 million) in registered capital. [Chinese language rules here]
Insurance cases
In the matter of Reed Constructions Australia Pty Ltd (in Liquidation) – Walley v Chubb Insurance Australia Ltd [2019] NSWSC 1007 (8 August 2019) – D&O – joining insurers to proceedings – standard coverage reservations did not amount to relevant controversy between insurer and insured to justify joinder
Court of Appeal (NSW) – A D&O policy responded to a claim by liquidators against director for insolvent trading. A director entered into a personal insolvency agreement. The liquidators agreed only to enforce judgment against proceeds of insurance policy. The question was whether the insurer should be joined to proceedings pursuant to Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW). Following earlier first instance authorities, the court refused leave to join the insurer as there was no utility in doing so where coverage had been confirmed for the insured director. Although the insurer had raised standard D&O coverage reservations, these were not sufficient to amount to a valid controversy between the insurer and insured director.
Bank of Queensland Limited v AIG Australia Limited [2019] NSWCA 190 (6 August 2019) – Aggregation clauses – “related series of acts or omissions”
Court of Appeal (NSW) held that (i) a class action constitutes multiple “claims” under a professional indemnity policy; and (ii) all such claims were part of a “related series of acts or omissions” because each the Wrongful Acts alleged in the pleadings was alleged to be wrongful (at least in part) on the basis that the plaintiff had committed them with knowledge of a fraudulent Ponzi scheme – therefore the class action constituted a single claim only for the purpose of applying the deductible.
Simpson v Thorn Australia Pty Ltd trading as Radio Rentals (No 4) [2019] FCA 1229 (2 August 2019) – Federal Court orders disclosure of insurance policy for purpose of mediation, even though not relevant to any issue in the proceedings.
Federal Court (Australia): In an application to set aside a notice to produce insurance documents, an oral application for production of the documents pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth) was granted. AIG had applied for relief directed to preventing the applicant from obtaining access to various insurance documents relating to policies that were not currently in issue in the proceeding. It was found that the insurance documents were likely to be of utility to the applicant for the purposes of its participation in the mediation and relevant to the reasonableness of any offer of settlement. It was accepted that the production of the insurance documents would confer a tactical advantage on the applicant to the detriment of AIG and that the documents were not relevant to an issue in the proceeding. However, balancing those matters against the considerations in favour of production, the court was satisfied that an order for production of the documents was appropriate (and likely necessary) to ensure that justice is done in the proceeding.
Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson trading as Holgerssons Complete Home Service [2019] WASCA 114 (8 August 2019) : Conflict between wording in insurance policy wording and schedule resolved in favour of the schedule provision.
Court of Appeal (WA) – A construction policy defined the policy insureds as “the Person(s) or legal entity namedin the Schedule“. The Schedule included the named policyholder and “all Principals, Contractors, and Sub-Contractors”. A sub-contractors sought to rely on cover under the policy. The insurers argued that the only insured was the named policyholder on the basis (among other arguments) that clauses in the policy wording demonstrated forensically that cover was not intended to extend to sub-contractors unless certain listed conditions were satisfied.
The court rejected the insurers arguments and held that in construing a contract with pre-printed standard terms (the policy wording) and terms drawn for the specific contract (the schedule), where there is a conflict that would require a court to treat a provision of a contract as superfluous, the specifically drawn terms should should be given more weight – provided that when regard is had to the contract as a whole, those words are not seen as an obvious error or are inconsistent with, or repugnant to, the objective intention of the contract as a whole.
Insurance articles / news
Prudential will become a Hong Kong-headquartered insurer before the end of this year
Berkshire Hathaway enhances Asia D&O offering
Captive insurance rapidly growing in Asia – Swiss Re and Labuan IBFC
Will Aviva be the next UK firm to exit Asia?
Asia reinsurance opportunities growing: Fitch
Germany-based Munich Reinsurance Co. has appointed Steven Chang as chief executive of Greater China
Allianz Australia its dropping consumer credit insurance business by the end of September following a comprehensive review and concluding that was no longer cost effective to continue.
*Hong Kong, Singapore, China, Malaysia, Vietnam, Thailand and Australia.