The Insurers (Winding Up) (Scotland) Rules 2001

Explanatory Note

(This note is not part of the Rules)

These Rules supplement the Insolvency (Scotland) Rules 1986 in relation to the winding up of insurers in Scotland. They revoke, and re-make with modifications, the Insurance Companies (Winding Up) (Scotland) Rules 1986.

Rule 6 and Schedule 1 provide for the valuation rules in relation to a company’s general business policies. Rules 7 and 8 and Schedules 2 to 5 provide for the valuation rules in relation to a company’s long-term business policies. They introduce new requirements in relation to the valuation of unitised with profits policies, specify that the interest rate or rates used to calculate the present value of future payments must be fair and reasonable and change the basis of valuation from a modified net premium basis to a gross premium basis.

Rules 9 and 10 make provision for the attribution of liabilities and assets to a company’s long-term business in cases of doubt. Rule 12 requires a liquidator to obtain actuarial advice before taking certain courses of action.

Rule 14 allows the Secretary of State to require that assets of a company, representing its long-term business, be held by a trustee. Rules 16 and 17 oblige the liquidator to comply with certain requirements imposed on him by the Secretary of State in relation, for example, to refraining from making certain investments and to the provision of information and accounts.

Rule 20 allows a liquidator to accept late payment of premiums and to compensate policy holders whose policies have lapsed. Rule 25 stipulates various notice requirements where a stop order has been made.