The European Insurance and Occupational Pensions Authority (EIOPA) has called upon national supervisory authorities to safeguard insurance policyholders in the event of a no-deal Brexit scenario.
In a series of recommendations addressed to National Competent Authorities, the regulator provides guidance on the treatment of UK insurance undertakings with regards to cross-border services in the EU. The recommendations will apply from the date following the UK's departure from the EU.
According to law firm Herbert Smith Freehills, the recommendations are a mix of explicit guidance and softer advice, but that many questions remain unanswered:
"Overall, EIOPA's announcement attempts to strike an appropriate balance, reflecting the considerable lobbying efforts by UK and EU27 trade bodies. Its acknowledgement of individual state discretion in a number of key areas does, however, still leave uncertainty for UK firms planning for 29 March 2019."
Some in the industry have noted that this advice has come late in the day; however, Airmic's technical director and deputy CEO, Julia Graham, said it is still a useful contribution:
"EIOPA's focus on continuity of cover is particularly welcome. The impact of Brexit on insurance contracts is complex and depends on various factors, including the bespoke plans of each individual insurer and whether contract continuity clauses are in place.
"We continue to advise our members to discuss the issues particular to their own contracts with their brokers, and to consider taking legal advice if needed. Members should also take the opportunity to brief their executive committee and board on the key issues."
EIOPA has given national regulators two months to say if they comply with each recommendation, or explain non-compliance.
Click here for the full guidance from EIOPA.
Click here for the key points as summarised by Herbert Smith Freehills.
Click here for Airmic's guide to Brexit continuity clauses, written with Herbert Smith Freehills.