Tobin Ashby, insurance law expert at Pinsent Masons, is more hopeful in 2018 following a raft of recent announcements on the future of regulatory arrangements for insurers.
And the stakes couldn’t be higher.
Last Autumn, chancellor Philip Hammond indicated the severity of the consequences when he told Treasury Committee chair Nicky Morgan the government is “alive to the risk” of contracts left unable to pay out.
During a congenial visit this month, French president Emmanuel Macron said UK financial services could “be my guest” to continue to access the single market if it paid and stuck to EU rules.
Pay no attention
Ashby notes the European Insurance and Occupational Pension Authority’s (Eiopa) most recent statement which, he argues, asks the industry to effectively ignore any developments in political negotiations.
Eiopa advises “the transfer of insurance contracts of UK undertakings with policyholders in the EU27 to an insurance subsidiary established in an EU27 Member State” and vice a versa.
Bearing that in mind, Ashby cites “pragmatic and important statements” from HM Treasury and the Prudential Regulatory Authority showing the probable steps they could take to try to alleviate short term issues.
It appears, at a regulator level, this willingness to work together on what is likely to happen rather than what may happen is fuelling optimism.
For example, the PRA indicated EU firms can assume they will be able to set up a branch office in the UK and has echoed Eiopa’s aims of ensuring service continuity.
However, Ashby warns firms still need to make alternative arrangements in the event of the mood music doesn’t materialise into a concrete EU27-UK deal and the only way to do that is ensure dual UK and EU27 authorisation with the set-up of subsidiaries and the transfer of insurance contracts into the relevant jurisdictions.