On Monday, the chair of the Treasury select committee Nicky Morgan took the ABI’s concerns to chancellor Philip Hammond calling for clarity in the event of a ‘cliff edge Brexit’.
Urgency and reciprocity
Director general of the ABI, Huw Evans, said: “We are pleased that Nicky Morgan, as chair of the TSC, has raised this important issue with the chancellor.
“This is a shared challenge for the EU and UK and a vital issue for millions of our customers. We have been urging all sides to address it as a matter of urgency and agree on a reciprocal solution.”
No replacement agreement
If the UK leaves the single market, some insurers will lose their automatic licence to provide insurance in the customer’s jurisdiction.
They therefore may not be legally able to pay what they owe without a replacement agreement.
Groups impacted include:
- Companies in the UK paying pensions to people living in the EU, including expats.
- Anyone resident in the UK receiving a pension from the EU.
- Business insurance contracts, such as liability insurance sold from the UK to a company in the EU
- Business insurance contracts sold from the EU into the UK.
Life industry representatives told International Adviser they would work with all stakeholders to find a shared solution.
UK firms paying into domestic accounts or those with subsidiary offices in the EU27, however, are not expected to be be hit by the loss of passporting.
Hammond has until September 21 to answer Morgan’s questions:
Does the Treasury consider that the problem set out above poses risks to a smooth and orderly exit, and does it therefore consider it to be a matter for the first phase of the Article 50 negotiations?
What proposals are being considered to preserve stability and certainty in respect of insurance contracts that straddle ‘Brexit day’?
In particular, does the Treasury wish to see arrangements that allow contracts written before ‘Brexit day’ to retain the same regulatory treatment for their duration?
Does the government intend to publish a position paper on this question?