May 2007
49.20 Action required where existing cover in place
Where the insolvent has any type of insurance cover in force at the date of the winding up or bankruptcy order, the official receiver should not assume that this insurance will continue. The official receiver should -
obtain details of the insurance companies concerned,
obtain the policy number(s),
establish the position regarding the payment of the premium(s) and
establish the expiry date(s) of such cover,
check that the cover arranged by the insolvent is adequate,
check whether the validity of the insurance has been affected by the insolvency.
In addition, the official receiver should ensure that all policy documents are recovered as soon as possible.
49.21 Continuance of cover
The official receiver should exercise discretion as to whether to effect new short term insurance under the Willis Insolvency Open Cover Facility (see Part 3) or to continue to allow the existing cover. Where the official receiver is satisfied that adequate cover is provided under the existing policy (see paragraph 49.8 to 49.12), he/she should contact the insolvent’s insurers without delay to inform them of his/her interest in the relevant policies. Written confirmation of the cover still required should be sent to the insurance company and the relevant current policies should be sent for endorsement of the official receiver’s interest in them. Where an insurance policy is endorsed in the official receiver’s favour, to avoid the risk of liability being repudiated on the grounds of, for example, inadequate disclosure in the original proposal, the official receiver should seek to obtain an endorsement in the form outlined in Annex 2 to this chapter.
49.22 Cancellation of existing cover
If the official receiver considers it is preferable to terminate cover previously effected by the insolvent, he/she should notify the insurance company in writing at the earliest opportunity that cover is no longer required so that a refund of premium can be obtained. Policy number(s) should be quoted whenever they are available.
If there are outstanding claims or the possibility of a claim on the existing insurance it may be prudent to leave the policy in force until these are resolved.
49.23 Life Assurance
Where a bankrupt has an interest in any life assurance (including critical illness policies) or endowment mortgage policies, etc they may vest in the trustee as part of the insolvent's estate and the official receiver should recover the relevant policy documents and notify the assurance companies of the making of the bankruptcy order. For further details see also Chapter 31.5, paragraphs 31.5.40 to 31.5.49, Chapter 33 - paragraphs 33.30 and 33.62.
49.24 Indemnity for lost property documents
The official receiver may be requested to provide an indemnity to an assurance company when he/she is dealing with the surrender of life assurance policies of which bankrupts are the beneficiaries; where the policy document has not been recovered and is presumed lost, mislaid or destroyed. The indemnity provides against any liability for passing the surrender value of the policy to the official receiver. The position is the same on the realisation of shares for which no certificates have been recovered (see also Chapter 31.5, paragraph 31.5.55). In the case of missing life policies the amount of indemnity required is the maturity/surrender value as advised by the life company. For lost share certificates, the amount of indemnity is the current value of the shares but do recognise that share prices may go up or down.
As the majority of policies dealt with are of a relatively low value and the instances of the indemnity being called upon are rare, the official receiver may give an indemnity to the insurance company in respect of the value of the policy without having to obtain a counter indemnity from an insurance company.
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