The Lloyd’s Market Association (LMA) has published a Brexit Binding Authority Sunset Endorsement. The clause is designed to help with the transition of European binding authority business from the UK to Lloyd’s new subsidiary in Brussels, in preparation for Lloyd’s managing agents losing their permission to write EEA business as a result of Brexit.
As explained in Lloyd’s Market Bulletin Y1566, Lloyd’s expects all EEA risks to be written on behalf of its Brussels subsidiary from 1 January 2019. In the Market Bulletin, Lloyd’s requests that either all binding authorities covering EEA business be terminated with effect from 31 December 2018, or coverholders be instructed not to bind any EEA business under those binding authorities after that date.
The LMA’s sunset endorsement is consistent with the second option, and prohibits the binding of business after 31 December 2018 if the business has an EEA regulatory risk location. The endorsement is designed to be used in any binder which terminates after 31 December 2018 and has a territorial scope which includes EEA business. A copy of the endorsement can be found at:http://www.lmalloyds.com/LMA/News/LMA_bulletins/LMA_Bulletin_2013/LMA18_022_TH.aspx
Although Lloyd’s and other (re)insurance businesses are preparing for Brexit, their preparations are being made more difficult by not knowing the answers to some important questions on the future relationship between the UK and the EU. We have recently published a briefing on these questions and their impact on (re)insurance businesses. The briefing can be found at: http://www.hfw.com/Insurance-and-reinsurance-Brexit-considerations