In May 2012, we reported that the English Court of Appeal had upheld the decision of the English High Court in Re Digital Satellite Cover Limited to wind up three companies which were held to be conducting insurance business without possessing the requisite UK Financial Services Authority (“FSA”) authorisation. The companies, which were not part of the Sky group, provided extended warranty contracts to Sky satellite customers. In consideration of a periodic payment, these contracts covered repairs or replacements of satellite equipment in the case of specified damage, breakdown or malfunction. 

On appeal to the Supreme Court, the companies argued that these contracts were not of a kind which required their business to be authorised by the FSA, because the classes of insurance under UK law did not extend to contracts which only provided benefits in kind (repair services and replacement goods). 

In dismissing the appeal, the Supreme Court unanimously held that extended warranty contracts were contracts of insurance as defined under UK legislation. The court held that while the First Council Non-life Insurance Directive (73/239/EEC), as amended (the ‘First Non-Life Directive’), specified certain categories of non-life insurance business, this did not preclude a Member State from regulating further or wider categories of insurance under its national law.

In the Supreme Court’s opinion, the First Non-Life Directive is concerned only with prescribing the kinds of insurance business that a Member State’s national law must regulate, and does not prohibit Member States from treating additional types of business as “insurance”.

To view our previous article on this case, please click here.

Contributed by Niall Campbell