Britain’s exit date from the EU, 29 March 2019, is just six months away and key details concerning insurance regulation, in particular in the absence of clarity as to what a future trade deal between the UK and the EU27 will look like, remain undecided. The UK government has issued guidance for businesses on how to prepare for a “no deal”, but it is silent on the subject of insurance.
Many Brexit scenarios are still possible:
- Hard Brexit no deal and the UK becomes a third country such as Japan
- Withdrawal agreement: under discussion but financial services are not included in the current draft
- An EEA type agreement which means that the UK is still linked to the EU
- Free trade agreement, but nothing started yet
- 2nd referendum: pushed by the “remain” movement, but little political backing
- Extension of article 50, which would require the unanimous agreement of the 27 other member states on the request of the UK.
In the absence of a political solution, insurers are taking the initiative to ensure business continuity: establishment of an EU subsidiary, transfer of existing EU business to the subsidiary or a new insurer and creating “continuity clauses”.
The UK government has said that post-Brexit, EEA insurers will be able to continue paying claims to UK insureds, but the EU has not given a reciprocal assurance to UK insurers for EEA customers. The purpose of the continuity clauses is to provide some assurance to insureds in case passporting ends. Airmic published a white paper on continuity clauses at its “Deal or No Deal” leadership group summit on 20 September. Written in partnership with solicitors Herbert Smith Freehills, the paper will be available on the Airmic website from next week.
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