What Will Happen With London’s Infamous Solvent Schemes of Arrangement
A Business Insurance article by Sarah Veysey reports that news is expected "soon" on British regulation of solvent schemes of arrangement, a scourge for companies and persons that purchased insurance policies. The comments follow up on September 2013 "consultation" on the solvent schemes.
In brief, a solvent scheme is a proceeding in which an insurer seeks to run away from its prior promises, without paying fair value for running away from its prior promises. As some may recall, solvent schemes were shredding up insurance coverage, with many of the schemes led by PwC in the UK. A partial list of the schemes is here. The schemes were very popular until large policyholders finally threw down the gauntlet in litigation. Ultimately, solvent schemes were finally slowed by Covington & Burling in the Scottish Lion case. Covington also published comments on the consultation paper, from the perspective of a policyholder.
To the dismay of some, Rhode Island enacted "scheme" legislation and GTE Re went through the process.