Last Tuesday the law decree which sets forth the applicable measures in case of "hard" Brexit" (see our newsflashes of 20th and 26th March 2019 ) has been converted into law and eventually published in the Italian Official Gazette.
As far as insurance companies are concerned, such law confirms the content of the decree and, therefore, upon the date of exit of the UK from the EU, the UK insurance companies doing business in Italy under the right of establishment or the freedom to provide services regime will be cancelled from the register held by IVASS containing the names of the companies authorized to do business in Italy. However, in order to guarantee the continuity of the business, UK insurance companies shall be allowed in the transitional period - starting from UK's exit from the EU to the end of the eighteen's month following such exit - to continue manage the policies in force, without the possibility however to write new business or to renew, also tacitly, the policies in force. IVASS shall render public such transitional business activity.
UK insurance companies are requested to submit to IVASS - in 90 days by the date of entry into force of the law decree - a plan illustrating the measures that they intend to implement in order to guarantee the continuity of business, including management of claims and the relevant payments. IVASS is authorized to request integrations and updates to the plan at any time.
In fifteen days by the time the UK exit from the EU is accomplished, UK insurance companies must inform the policyholders and those entitled to the payment of a benefit/indemnification of the way by which they intend to continue the business, also by means of a publication of the relevant communication on their website.
Starting from the date of exit, policyholders are allowed to withdraw from policies whose duration is more than one year without incurring in any expense, by, among others, giving a communication in writing to the insurance company. Any clause of tacit renewal contained in the policy ceases to be effective and the withdrawal by the policyholder is effective from the expiry date of the first year following the date of exit of the UK from the EU.
UK insurance companies remain subject to the supervisory powers of IVASS with respect to the transitional business is carried out in Italy.
As regard UK insurance and reinsurance intermediaries doing business in Italy under the right of establishment or the freedom to provide services regime at the time of exit, these shall cease their business at that date and shall be simultaneously cancelled from the register of intermediaries held by IVASS. However, in order to avoid any prejudice in respect of the policyholders, the assureds, and those entitled to the payment of benefits/indemnifications, insurance intermediaries are allowed to put in place what is strictly necessary to close the contractual relationships in force promptly and, in any case, in no later than 6 months from the date Brexit has occurred. In the said period of six months, insurance and reinsurance intermediaries cannot start new business nor renew distribution agreements in force and within 15 days from the date of Brexit they must communicate to their clients, to whom they have relationships in doing business and to the relevant Authorities the measures adopted to grant an ordered cease of the activity.
Also in the case of UK insurance and reinsurance intermediaries, these must inform policyholders, assureds and those entitled to the payment of benefits/indemnifications, of the way they intend to continue doing business in the transitional period and remain subject to the supervisory powers of IVASS.
Italian insurance companies authorized to do business in the UK under right of establishment or freedom to provide services regime at the time Brexit occurs can continue doing their business in compliance with the provisions issued by UK.
Nothing is said with respect to Italian intermediaries operating in the UK under the right of establishment or the freedom to provide services regime.
Until the end of the transitional period, Italian tax provisions continue to be applicable, whereas VAT provisions apply, to the extent applicable.
As far as the banking and the financial services are concerned, the relevant operators are allowed to carry out - in the transitional period starting from UK's exit from the EU to the end of the eighteen's month following such exit - the ordinary business limitedly to what it is necessary to the management of the contractual relationships started before the date of exit, without the possibility of concluding new contracts or renewing, also tacitly, those in place. Ordinary activity must nonetheless be previously notified to the Bank of Italy.
In particular and among others, UK fund managers, UK UCITs, etc. operating in Italy under freedom to provide services with retail and professional clients shall cease their activity on the Italian territory at the time Brexit occurs, save for the conduct of what it is strictly necessary to close the relationships in force at that date as soon as practicable and, in any case, in no later than 6 months from date Brexit has occurred.
Investment by pension funds in UK UCITs or AIFs will be assimilated to investments in EU UCITs and AIFs, during the transitional period.