Retrocession Broker Scheme Contract.

Descriptions

Flood Re is a not-for profit reinsurance company that will be designated as the ‘FR Scheme Administrator' pursuant to the Water Act 2014. A ‘Memorandum of Understanding' of June 2013 between the UK government and the Association of British Insurers provided that Flood Re will be owned and managed by insurers, with the aim that the reinsurance effected by Flood Re will result in affordable flood insurance for households in the UK, in particular, over time, by reference to the likelihood and severity of the risks of flooding facing such households. The statutory scheme for flood insurance and reinsurance involving Flood Re is intended to cease after 25 years.The planned operating model for Flood Re is to outsource much of its operational or commercial functionality. As part of such outsourcing, a broker is to be appointed to handle a number of operational or commercial functions that are necessary for Flood Re to be able to effect and carry out reinsurance contracts in compliance with UK law. In particular, such activities include: the selection, negotiation, agreement, administration and appointment of Retrocession / ART.The broker will enter into a contract with Flood Re for a period of 4 years, extendible by Flood Re for further periods so that the contract may be for 7 years in total.In addition to the procurement of the broker, Flood Re is also undertaking a separate procurement for the appointment of a managing agent.The broker is to be appointed during Q4 2014 to enable Flood Re to progress with the authorisation requirements of the UK's Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA).As Flood Re will only be classified by the ONS according to the European System of Accounts 2010 after designation in secondary legislation enacted pursuant to the Water Act 2014, there is a future possibility that: Flood Re will be classified by the ONS as a public entity forming part of central government or government corporation for accounting purposes; or Flood Re's funds will, in part, be classified as taxation for public accounting purposes. Similarly, following designation, there is a possibility that other public law requirements may apply, including requirements pursuant to: Flood Re being an emanation of the State for ‘pure' UK law purposes, especially Section 6 of the Human Rights Act 1998; Flood Re being an emanation of the State for EU law purposes, including direct effect: EU public procurement law and compliance with the UK Public Contract Regulations SI 2006/5 (as amended); EU state aid law; Environmental Information Directive (2003/4/EC) and Environmental Information Regulations 2004 requirements; administrative and accountability requirements pursuant to government administrative policy, including principles within Managing Public Money.Given the possibility of the public procurement requirements applying to Flood Re in the future, Flood Re is voluntarily following a procurement akin to the open procedure process for the appointment of the broker with the assistance of the Crown Commercial Services and external legal advisers. Flood Re makes no admission as to its public or private status by voluntarily adopting a procurement structure akin to those undertaken by contracting authorities in accordance with EU and UK procurement legislation.During the term of the contract, the broker may be required to undertake procurements on behalf of Flood Re in accordance with EU and UK procurement legislation.