Treatment of liabilities arising in connection with a contract subject to reinsurance to close
41.—(1) Where in respect of a member or former member who is subject to a Lloyd’s market reorganisation order any of the events specified in paragraph (2)(a) have occurred, for the purposes of the application of Part 4 of the principal Regulations to that member (and only for those purposes), an obligation of that member under a reinsurance to close contract in respect of a debt due or treated as due under a contract of insurance written at Lloyd’s is to be treated as an insurance debt.
(2) For the purposes of this regulation—
(a)The events are—
(i)in respect of a member which is a corporation the appointment of a liquidator, provisional liquidator or administrator;
(ii)in respect of an individual member, the appointment of a receiver or trustee in bankruptcy; and
(iii)in respect of a member in Scotland being either an individual or a Scottish limited partnership, the making of a sequestration order or the appointment of an interim or permanent trustee;
(b)“reinsurance to close contract” means a contract under which, in accordance with the rules or practices of Lloyd's, underwriting members (“the reinsured members”) who are members of a syndicate for a year of account (“the closed year”) agree with underwriting members who constitute that or another syndicate for a later year of account (“the reinsuring members”) that the reinsuring members will indemnify the reinsured members against all known and unknown liabilities of the reinsured members arising out of the insurance business underwritten through that syndicate and allocated to the closed year (including liabilities under any reinsurance to close contract underwritten by the reinsured members).