The Financial Services and Markets Act 2000 (Law Applicable to Contracts of Insurance) Regulations 2001

Explanatory Note

(This note if not part of the Regulations)

These Regulations specify the law that applies to contracts of insurance, the effecting or carrying out of which constitutes a regulated activity within the meaning of the Financial Services and Markets Act 2000 (“the Act”).

Regulation 3 specifies the scope of the Regulations and makes certain modifications to the application of the Regulations to friendly societies which are not covered by the insurance directives (within the meaning of Schedule 3 to the Act).

Regulation 4 specifies the applicable law for contracts of general insurance (as defined by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“the Regulated Activities Order”) (S.I. 2001/544)) which cover risks in an EEA State.

Regulation 6 makes provision as to how the parties' choice of law must be expressed and specifies that where the risk is covered by Community co-insurance, as defined by Council Directive 78/473/EEC on the coordination of laws, regulations and administrative provisions relating to Community co-insurance (OJ L 151, 7.6.78, p.25) the leading insurer is to be treated as the only insurer.

Regulation 8 specifies the applicable law for contracts of long-term insurance (as defined by the Regulated Activities Order) where the policyholder has his habitual residence in an EEA State or the establishment of the policyholder to which the contract relates is in an EEA State. The applicable law is the law of that EEA State unless the law of that State or these Regulations permits the parties to choose a different law.

In circumstances specified by regulations 5 and 8, mandatory rules apply to a contract of insurance regardless of the applicable law.

Where these Regulations apply and regulation 4 or 8 does not specify the applicable law, the Contracts (Applicable Law) Act 1990 is to be treated as applying for the purpose of determining the applicable law. That Act is also to be treated as applying for the purpose of determining what freedom of choice the parties have under the law of a part of the United Kingdom and, in the case of contracts of general insurance, what mandatory rules of other EEA States apply.