Brexit – European Commission Calls on Insurance Sector to Get Brexit Ready
Tue Jul 21 2020
The European Commission has recently published “Readiness Notices” in relation to Brexit. These are particularly important to Brokers Ireland who do cross border business.
We would remind Members that since 1 February 2020, the United Kingdom has withdrawn from the European Union and has become a “third country”. The Withdrawal Agreement 2 provides for a transition period ending on 31 December 2020. Until that date, EU law in its entirety applies to and in the United Kingdom. During the transition period, the EU and the United Kingdom will negotiate an agreement on a new partnership. However, it is not certain whether such an agreement will be concluded and will enter into force at the end of the transition period. In any event, such an agreement would create a relationship which will be very different from the United Kingdom’s participation in the internal market. Therefore, all interested parties, and especially economic operators, are reminded of the legal implications that the end of the transition period will have on their activities. Insurance/reinsurance intermediaries registered in the United Kingdom will no longer benefit from their registration rights under Directive (EU) 2016/9716 and will therefore no longer be able to conduct business in the European Union on the basis of their UK registration. UK insurance undertakings will no longer benefit from the Solvency II authorisation 8 to provide services in the EU.
Branches of UK insurance undertakings in the EU will become branches of third-country insurance undertakings. They will need an authorisation in the Member State of their activity to be able to continue to do business. EU subsidiaries (legally independent companies established in the EU and controlled by or affiliated to insurance undertakings established in the United Kingdom) can continue to operate as EU insurance undertakings. UK reinsurance undertakings will be impacted for their EU business. According to the Solvency II Directive, they will be subject to the conditions set by the EU Member State in which they carry out their activity. (equivalence assessment is ongoing). According to the Solvency II Directive, firms are required to take measures to ensure that contracts can continue to be serviced. To this end, firms should assess the implications of the end of the transition period on their operations and contract portfolios.
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