Although the United Kingdom left the EU as of 31 January 2020, it will continue to benefit from the EU passporting permissions until 31 December 2020. The most significant issue for (re)insurers and intermediaries is that following the end of the transition period, they will lose the benefit of the current passporting rights (see below). The UK has until 31 December to negotiate its future relationship with the EU. The time is ticking therefore, for a deal to be reached.
Brexit continues to represent an unprecedented challenge for UK (re)insurers and intermediaries carrying on EEA cross-border business and also for European (re)insurers and intermediaries passporting into the UK. The continued delay poses many questions and raises several issues which undertakings have been struggling to address. Many UK insurers and intermediaries have responded by establishing authorised undertakings within the EEA so that they can continue to support their EEA business. However, many also continue to rely on their UK operations for technical and other support and it remains to be seen how this will work in practice, particularly if the UK- EU future trade negotiations do not conclude positively for the financial services sector.
In our experience (re)insurers are, as a general rule, well prepared for the possibility of a hard Brexit. Most were well organised and submitted their applications to seek authorisation under the European Union (Insurance and Reinsurance) Regulations 2015 (the SII Regs) relatively early after the Brexit vote was passed. Consequently, they seem to be reasonably well positioned to cope with a hard Brexit should it arise.
In our experience insurance intermediaries followed the insurance carriers and many have either secured their authorisations already or are on track to secure them by the end of 2020. In our view, if a (re)insurer or intermediary has not submitted an application to the Central Bank of Ireland, it is now too late to secure authorisation by 31 December 2020. Some of our clients are therefore in discussions with other carriers on "fronting" arrangements in the case of (re)insurers and in the case of intermediaries to agree a referral arrangement with local authorised intermediaries.