“AT A GLANCE” GUIDE
BREXIT UPDATE – EEA (RE)INSURERS
UK approach Recent announcements made by the UK government and UK regulators clarify their approach to Brexit following agreement to a transition period for the UK’s withdrawal from the EU. Comments made by the UK’s PRA are particularly important for (re)insurers. In summary:
•The UK is committed to keeping UK markets open to EEA (re)insurers once the UK leaves the EU.
•All (re)insurers have been encouraged to assume that they will benefit from passporting rights under the transitional agreement until December 2020.
•As “nothing is agreed until everything is agreed”, there is a risk that the UK will leave the EU without having agreed exit terms and, therefore, without the benefit of a transition period.
•Failing such agreement, the UK’s “temporary permission” regime will enable firms coming into the UK from other EEA jurisdictions to carry on business here while they obtain the authorisations needed for those activities.
•Nonetheless, EEA (re)insurers should consider how they will conduct business in the UK once they no longer benefit from Solvency II passporting rights or the equivalent under the “temporary permission” regime.
•Firms need to look in particular at whether they will need to apply for a UK authorisation to replace those rights. Next steps Some EEA firms may simply decide to stop doing business in the UK. Other options (see next page) are to:
•Conduct business through a UK branch (provided the PRA does not require the firm to subsidiarise).
•Provide insurance services into the UK without a permanent presence here.
•Write business though a newly established (or existing) fully authorised UK subsidiary. Despite the anticipated transition period, firms should be making plans now as any necessary restructuring of the business or application for new regulatory approval will take some time to complete.
EEA insurers and reinsurers doing business in the UK must prepare for the UK's withdrawal from the EU. We consider below the impact of Brexit on the cross-border activities of EEA (re)insurers, including how firms might respond to the European Council’s agreement to a transition period.
Geoffrey Maddock Partner, London T +44 20 7466 2067 firstname.lastname@example.org Barnaby Hinnigan Partner, London T +44 20 7466 2816 email@example.com
Alison Matthews Consultant, London T +44 20 7466 2765 firstname.lastname@example.org Grant Murtagh Senior Associate, London T +44 20 7466 2158 email@example.com
Additional commentary on the implications of Brexit for businesses can be found on our Insurance blog at: https://hsfnotes.com/insurance/. Our recent publications include:
PRA and FCA clarify impact of Brexit transition for insurance sector
•Brexit – PRA consults on approach to UK branches of incoming insurers
•Brexit: impact on EEA insurers and non-EEA headquartered groups Other information includes:
•HM Treasury statement on financial services and Brexit
•International insurers: the Prudential Regulation Authority’s approach to branch authorisation and supervision
•FCA statement on EU withdrawal following the March European Council
•PRA update on the regulatory approach to preparations for EU withdrawal
•EIOPA: Opinion on service continuity in insurance in light of the withdrawal of the UK from the EU
SOURCES OF INFORMATION
29 March 2017
UK triggers Article 50
19 June 2017
Formal Brexit negotiations start
23 March 2018
EU Council approves transition period to end 2020
October 2018 - March 2019
UK and EU Parliament and EU Council vote on Withdrawal Agreement
31 December 2020
End of transitional phase and final EU/UK FTA (if agreed)
If you would like to speak to us about any of the legal and regulatory issues raised by Brexit, please contact a member of our team.
Senior Associate, London T +44 20 7466 2127 firstname.lastname@example.org
Hubert Segain Partner, France T + 33 1 53 57 78 34 email@example.com
Partner, Germany T +49 211 9755 9072 firstname.lastname@example.org
Paulino Fajardo Partner, Spain T +34 91 423 4110 email@example.com
ISSUES FOR EEA FIRMS
Withdrawal Bill passed
29 March 2019
UK leaves EU to transitionals or “cliff edge” WTO
End October 2018
EU/UK in principle agreement to leaving terms and transitional?