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Just in: UK ILS regulations receive approval

Just in: UK ILS regulations receive approval | Insurance Business

Just in: UK ILS regulations receive approval
It’s all systems go for UK Insurance Linked Securities (ILS), which have today received Parliamentary approval.

A UK government cross-party parliamentary committee has completed its meeting and approved the Risk Transformation Regulations 2017 and the Risk Transformation (Tax) Regulations 2017, which will make up the UK ILS regulatory regime – albeit questions were raised by those in attendance, among them the fact that the regulations had been prioritised at a time when the UK government is facing an exit from the European Union.

Still the news has been widely greeted – with some outlining its potential benefits for insurance brokers.

“The news that the regulations have been approved is a great step forward. London is in a strong position when it comes to attracting ILS business as it is home to some of the world’s best and brightest insurance talent, whose knowledge, experience and ability to innovate is unparalleled,” said William Hogarth at Clyde & Co. “London also has a thriving community of brokers too and can draw on a huge amount of capital.

“The protected cell company model for ILS is attractive in that it allows investors to ring-fence risk; with each individual cell of a protected cell company effectively operating like a separate insurance vehicle. Each cell is fully funded for the risk or portfolio of risks for which it is designed but is isolated from other cells within the protected cell company, ensuring there is no cross-contamination.”

Nevertheless, Hogarth outlined that there will be hurdles for potential investors to overcome.

“ILS investors used to operating in jurisdictions such as Bermuda will need to get to grips with what London has to offer,” he said. “A key sticking point is likely to be the speed-to-market facilitated by the efficiency of regulatory approvals; if London can genuinely compete with the established ILS markets in this space then the sky is the limit for the UK to become a hub for ILS business.”

Find out more about how ILS regulations work, here.


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