The following update is intended to explain the latest developments at Intermediaries Guarantee Facility Limited following changes to the Non-lifeInsurance Regulation, that was published on 28 September 2018.
The regulations provide that a credit intermediary is no longer required by law to hold a financial guarantee. Rather the authorities expect insurers and the market to in future manage the relevant risks facing them in respect of credit risk.
Due to administrative and operational difficulties facing the market and to facilitate a smooth transition, the authorities granted Intermediaries Guarantee Facility Limited permission to operate for a further 6 months, effective 1 October 2018 to 31 March 2019, provided that all existing and extended guarantees are cancelled at 31 March 2019, with no run-off. A common law prescription period of three years will follow however Intermediaries Guarantee Facility Limited is planning to shorten this period substantially by confirming with insurers that all premiums have been paid up at 31 March 2019, by the respective credit intermediaries the insurer is dealing with.
Intermediaries Guarantee Facility Limited has decided that for all year ends of 30 September 2018 and prior a normal renewal will take place. This may result in a refund being due to relevant credit intermediaries after 31 March 2019. For year ends after 30 September 2018 an extension of time to 31 March 2019, subject to certain terms and conditions, is offered on current guarantees at a pro-rated premium – based on the previous, full year’s, premium and pro-rated for the number of months that an extension is granted for.
At the close of business on 31 March 2019, all IGF guarantees were cancelled and the applicable premiums subsequently paid out to guarantee holders.
All collateral security and bank guarantees will be retained, after 31 March 2019, for a three year common law prescription period in the event that a claim is made against Intermediaries Guarantee Facility Limited during the three year prescription period, for a date of loss falling within the time the guarantee was active. We are in the process of discussions with our attorneys and the authorities on the plan to shorten the prescription period as mentioned above and will revert in due course.
For more information contact:
Charles Hitchcock, SAIA Chief Operations Officer