On 5 March 2018, Insurance Europe published an updated version of its position paper on the consequences of Brexit on existing insurance contracts.
The paper recommends that the UK and the EU agree on an appropriate transitional arrangement to bring legal certainty and more time so that there is sufficient time to re-organise businesses, set up branches and subsidiaries and transfer policies. In addition, grandfathering of certain existing (re)insurance contracts as part of the Article 50 negotiations under the citizens’ rights chapter is needed.
Grandfathering would mean:
- recognition that the rights and obligations of the parties to (re)insurance contracts written lawfully under passporting continue;
- (re)insurance contracts in force at the date on which the Treaties cease to apply to the UK would continue to be in force until they expire in accordance with contractual provisions;
- legal obstacles to the ability of a party to a (re)insurance contract to enforce a right or discharge a responsibility under the contract would not apply;
- (re)insurers that have appointed a legal representative under Article 145 or 152 of the Solvency II Directive would maintain a legal representative in the country concerned, until the relevant national competent authority is satisfied that the business has been fully completed;
- regulatory responsibility for contracts should remain as it is at present, that is, prudential regulation would remain a home state responsibility and conduct regulation a host state responsibility. Supervisory liaison could be ensured by establishing an EU27/UK committee, possibly under the auspices of the European Insurance and Occupational Pensions Authority;
- special provisions would be needed for contracts between the UK and EEA Member States that are not EU members.
The position paper says that the European Council's negotiating directives mandate the European Commission to negotiate an agreement that ensures any goods placed on the market before the withdrawal date will continue to be made available after that date. Insurance Europe calls for services to be given similar consideration as soon as possible.