DARAG Insurance UK Limited

Activities and protection

What they can do, and how you are protected

• Hold or safeguard your money FSCS may apply
  Eligible deposits are typically protected by the FSCS up to £120,000 per person, per banking group.
• Manage or trade investments FSCS may apply
  Eligible investment and pension claims are typically FSCS-protected up to £85,000 per person, depending on the product and your circumstances.
• Sell or arrange insurance FSCS may apply
  Eligible insurance claims may be FSCS-protected, often 90%, or 100% for compulsory or long-term cover.

Check your FSCS cover →

Complaints: You can refer a complaint about this firm to the Financial Ombudsman Service for free, whichever activity it relates to.

Track record

Action taken against them

3 FCA actions between 2003 and 2004. This is part of the official register record and is worth reviewing before going ahead.

• Publicly censured on 29 November 2004

  1 In the period 1 December 2001 to 26 March 2003, the firm breached Principle 11 of the FSA's Principles for Businesses by not being open and co-operative with the FSA by: (a) taking steps at the year ends of 2001 and 2002 which had the effect of circumventing a regulatory requirement, namely the firm's Premium Income Limits (PILs) set for 2001 and 2002; and (b) not informing the FSA that it was considering taking, or had taken, those steps. 2 The firm did this by arranging to split the period of conventional 12 month insurance contracts so that part of the premium income relating to those contracts was deferred into the following accounting year. 3 The FSA views this breach as a serious failing because: (a) a PIL is an important regulatory tool to protect consumers by limiting the underwriting risk to which an insurer may be exposed and the risk of the insurer becoming insolvent due to over expansion; (b) PILs are imposed on insurers as limitations on their permissions to carry on regulated activities. A PIL requires an insurer to take all necessary steps not to exceed the stated limit on gross written premium income for the relevant year; (c) as a result of the firm's decision to split insurance contracts, the gross written premium income that it reported to the FSA in its Annual Returns for 2001 and 2002 did not exceed the PIL, but did not accurately reflect the underwriting risks to which it had committed itself; (d) the firm failed to inform the FSA, despite frequent contact with the FSA, about its policy to circumvent the PIL by splitting insurance contracts, particularly in the second half of 2002 when the firm was asked to confirm on a number of occasions that it was still writing below its PIL; and (e) the firm's breaches occurred in 2001 and were repeated in 2002. 4 However, in deciding to issue a statement of public censure rather than impose an alternative disciplinary sanction, the FSA has taken account of the facts that: (a) the breach relates solely to the firm's dealings and relationships with the FSA concerning its PILs and not to any other aspects of its business; (b) the firm is now in run-off and is therefore not taking on any new business; (c) the firm's board was not collectively aware of the relevant transactions; (d) the firm's current senior management were not responsible for the firm committing the breaches; (e) the firm conducted its own investigation into the splitting of the contracts and gave its findings to the FSA; (f) the firm was faced with an insurance market which was experiencing increasing premium rates, particularly so after 11 September 2001, which in turn put pressure on the firm's ability to comply with the PILs despite the fact that the firm had applied for increases in their PIL. The majority of the contracts were split at the year end, when pressure on the PILs was most acute; (g) the monetary value of the breach which the firm avoided in 2001 by splitting insurance contracts was less than 1% of the PIL. In 2002 the figure was less than 3%; (h) the firm implemented detailed underwriting guidelines designed to restrict the level of insurance business that it was writing; (i) the firm cancelled some insurance contracts due for renewal and did stop writing new insurance business in the last quarters of 2001 and 2002; (j) the firm applied to the FSA to increase it's 2002 PIL and appeared to be open and co-operative in its dealings, with the exception of informing the FSA of the split insurance contracts; (k) no policy-holder has suffered any detriment as a result of the insurance contracts being split; and (l) the firm has been open and co-operative with the FSA during the FSA's investigation.

• Permission varied or cancelled on 15 May 2003

  TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS (the FSA) has taken the following action. ACTION 1. The Regulatory Decisions Committee of the FSA's Insurance Firms Division (RegCo) has refused an application from the firm (the application) for a variation of its Part IV Permission (the Permission) which, if granted, would have imposed a premium income limit of £130millions (the PIL) on the Permission for the year to 31 December 2003. 2. RegCo has also exercised the FSA's power to vary the Permission on its own initiative by imposing the following requirements: a. The firm's premium income must not exceed £105millions for the year to 31 December 2003, including any premium adjustments applied in subsequent years; b. The firm's premium income must not exceed £11millions for April 2003 and £6.5millions for May 2003, including any premium adjustments applied subsequently; and c. If the firm effects any contracts of insurance on terms which allow automatic renewal the estimated premium income that will, or may, be received under those contracts must be included in any assessment of the firm's premium income for April and May 2003. REASONS 3. RegCo was concerned that if the application was granted, and the firm effected contracts of insurance to the PIL requested, that would have adversely affected its ability to maintain adequate financial resources in the future; 4. RegCo therefore considered that the interests of actual or potential consumers would be adversely affected if the application was granted and that it was desirable in the interests of those consumers that the application was refused; 5. On the information then to hand, RegCo also considered it appropriate for it to exercise the FSA's power to vary the Permission on its own initiative (under section 45(1)(a) and (c) of The Financial Services and Markets Act 2000) to impose the requirements in paragraph 2. EFFECTIVE DATE 6. The firm's application was refused, and the Permission was varied, on 11 April 2003. DECISION MAKER 7. The decision to give this notice was made by RegCo on behalf of the FSA.

• Permission varied or cancelled on 14 March 2003

  The Regulatory Decisions Committee of the FSA's Insurance Firms Division (RegCo) has reviewed the firm's application for a variation of its Part IV permissiom which, if granted, would have increased its premium income limit for the year 2002. It has also reviewed the FSA's Insurance Committee's decision of 9 December 2002, to reject the firm's application, and the firm's formal representations, of 24 December 2002, against that decision. Having done so, RegCo has rejected the firm's representations and refused its application.

Common questions

Frequently asked questions