EIOPA published an opinion on 18 May 2018 on the impact on EU 27 (re)insurance undertakings (i.e. all EU members apart from the UK) of the UK leaving the EU and becoming a third country for the purposes of applying the Solvency II framework. The EIOPA opinion did not consider the mitigating measures that may be taken as part of the UK’s exit, as these remain subject to political negotiations.

In some areas relating to the determination of technical provisions, own funds, and capital requirements, Solvency II differentiates between exposures situated inside or outside of the EU. The Capital Requirements Directive, CRA Regulation, MiFID II and MiFIR include provisions that are relevant to the solvency position of (re)insurance undertakings and these include distinctions between activities inside and outside the EU.

As a result, technical provisions, own funds and capital requirements of EU 27 (re)insurance undertakings may change when the UK becomes a third country.

The EIOPA opinion stated that in relation to the risks arising from the UK becoming a third country, national supervisory authorities should:

  1. ensure that (re) insurance undertakings identify, measure, monitor, manage and report such risks and record them in their own risk and solvency assessment; and
  2. take steps to assess the risks arising for their national markets and, where necessary, take mitigating supervisory actions.


The EIOPA opinion also sets out 14 changes to the determination of technical provisions, own funds and capital requirements of (re)insurance undertakings in the EU 27 member states as a result of Brexit. These included changes in relation to the following:

Servicing contracts concluded in the UK

(Re)insurance undertakings must take measures to ensure service continuity regarding insurance contracts concluded in the UK. Where measures are not taken or they turn out to be ineffective, undertakings will not be authorised to service such contracts. As a result, the technical provisions for such contracts may need to be changed if the expected profit from these contracts cannot be earned or can be earned only after a period of delay.

However, it should be noted that on 20 December 2017, HM Treasury stated that the UK government will legislate to ensure that EU (re)insurers can continue to meet their contractual obligations in the UK following Brexit.

UK reinsurance

Depending on the national legal framework for reinsurance activities, the UK may not be able to provide reinsurance services in some EU 27 states. In such circumstances, EU undertakings may need to reduce the amount of recoverables from UK (re)insurance undertakings because the payments expected from the UK undertakings may not be made or may be made only after a period of delay.

Risk transfer

If UK banks and investment firms lose their MiFID II passports to provide derivative services in the EU then derivatives provided by UK banks and investments firms may not be able to transfer risk effectively. This would have a knock‑on effect on the solvency capital requirements of undertakings.

EIOPA will continue to monitor the risks arising from the UK becoming a third country.

The EIOPA opinion can be found here: https://eiopa.europa.eu/Publications/Opinions/EIOPA-BoS-18-2018_opinion_on_solvency_and_Brexit.pdf .