Managing historical insurance assets involving London market placements can be difficult, particularly when dealing with “long-tail” claims that trigger multiple years of coverage, such as asbestos, silica, or environmental claims. Understanding the impact of schemes of arrangement—solvent or otherwise—is critical to protecting the value of those assets. Once used principally to run off the business of insolvent insurers, scheme implementations are now being sought with increasing frequency by solvent insurers.

It is important for policyholders to address the issues associated with solvent schemes, even while assessing options for legal challenges to the solvent scheme implementation. Policyholders should not rely exclusively on the oversight of either the Financial Services Authority in England or the supervising court to protect their interests. To the extent the policyholder is a large enough creditor, the scheme managers may reach out to them directly to accommodate any concerns.

Prompt engagement of experienced insurance consultants or counsel is strongly advised when dealing with scheme arrangements.