Effect of “No Deal” Brexit
Tue Nov 6 2018
1 – Authorisations:
- UK Insurance markets will not be authorised to conduct regulated activities within the EU, including the Republic of Ireland (ROI) – i.e. they will not be able to advise clients, arrange/conclude contracts of insurance, collect premiums or handle claims. Branches of UK insurers in the ROI will need an authorisation in the ROI (or other member state) to be able to continue to conduct business here.
- ROI Insurance markets (that are passporting their services into the UK) will also no longer be able to conduct their business on the basis of their ROI registration/authorisation within the UK. (However, see note below on UK Temporary Permissions)
2 – Continuity of insurance contracts:
3 – Information disclosure:
- firms can continue to carry out business as before, writing new contracts and servicing existing contracts entered into before exit day for a temporary period after exit day,
- firms have appropriate time to prepare for and submit applications for UK authorisation and complete any necessary restructuring
- the PRA and the FCA can manage the expected applications for UK authorisation from EU firms that were previously operating in the UK via a passport in a smooth and orderly manner.
If a Broker is passporting its services into the UK (i.e. has clients in the UK) they must seek to obtain authorisation from the UK Regulator (FCA) as soon as possible.
- Take the appropriate contingency measures to ensure the continuity of services for cross-border insurance contracts between the UK and ROI. This will entail them asking each UK provider in respect of their ROI clients, and each ROI provider in respect of their UK clients, what their contingency plans are;
- Make customers and beneficiaries aware in a timely manner of the implications of these contingency measures both for existing and for new contracts concluded before the withdrawal date;
- Provide customers with clear information on the contingency measures taken or planned and on their impact on insurance contracts;
- Inform new customers about the impact on their contractual rights and on the provision of insurance services that may emerge from the withdrawal of the UK from the EU.
- change of the contractual cover following a transfer of insurance contracts to another insurance undertaking
- continuity of services and validity of insurance contracts
- In respect of UK pensions for ROI citizens, the pension payments may not be permitted to be paid into a non-UK bank account.
- change or loss of protection provided by any existing national compensation scheme due to the transfer of insurance contracts to an insurance undertaking located in another jurisdiction
- tax implications of insurance contracts including e.g. insurance premium tax following the relocation of an entity to another jurisdiction
- changes to the claims management procedure or to other customer services (e.g. following a change of domicile of an insurance undertaking)
- additional organisational arrangements to deal with customer inquiries related to the withdrawal of the UK from the EU (e.g. publication of FAQs for customers, contact details, helpline etc.)
- jurisdiction and contact details of the competent authority following a transfer of insurance contracts to another insurance undertaking or the relocation of an entity
- change of the law applicable to the insurance contract.