Restriction on policyholder surrender rights
(1) Where this Schedule applies in relation to an insurer, the total value of a policyholder’s rights under a relevant contract of insurance which the policyholder may surrender in a relevant period must not exceed the surrender limit for that period.
(2) For these purposes—
“ relevant contract of insurance ” means a contract of long-term insurance which is not a contract in respect of which the following conditions are met—
the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;
the contract has no surrender value, or the consideration consists of a single premium and the surrender value does not exceed that premium;
the contract makes no provision for its conversion or extension in a manner which would result in it ceasing to comply with either of the above conditions;
“ relevant period ” means—
the period of 12 months beginning with the date on which the insurer entered into financial difficulties, and
each subsequent period of 12 months;
“ surrender limit ”, in relation to a relevant contract of insurance and relevant period, is an amount equal to 5% of the total surrender value of the contract on the day on which the relevant period began.
Switching rights
(1) This paragraph applies where the value of a right under a relevant contract of insurance is wholly or partly determined by reference to property of any description.
(2) The reference in paragraph 3 (1) to the surrender of rights by a policyholder includes the exercise by the policyholder of a contractual right to change the property by reference to which the value of a right is (wholly or partly) determined.
Consent to exceed surrender limit
(1) Paragraph 3 (1) does not apply if, or to the extent that, consent for the surrender of an amount that would exceed the surrender limit for the relevant period has been given by—
(a) the court,
(b) a relevant office-holder, or
(c) where there is no relevant office-holder, the insurer.
(2) For these purposes, “ relevant office-holder ” means—
(a) a provisional liquidator of the insurer;
(b) an administrator of the insurer;
(c) a person appointed to act as the manager of a write-down order that has effect in relation to the insurer.
(3) The court, a relevant office-holder or the insurer (as the case may be) may give consent under sub-paragraph (1) only if satisfied that not doing so would cause the policyholder hardship.
(4) Where a provisional liquidator of an insurer has been appointed, the manager of a write-down order that has effect in relation to the insurer must obtain the consent of the provisional liquidator before giving consent under sub-paragraph (1) .
(5) As soon as reasonably practicable after giving consent under sub-paragraph (1) , a relevant office-holder or the insurer must notify the PRA.
