This was the message from Gabriel Bernardino, chair of the European Insurance and Occupational Pensions Authority (EIOPA), who this week urged firms to prepare contingency plans if the UK can’t reach an insurance deal with EU.
The UK, led by David Davis, has until March 2019 to reach a trade deal which would cover insurance products or UK authorised firms will not be able to pay out within EU.
EIOPA, European Securities and Markets Authority (ESMA), and the European Central Bank (ECB) have all expressed similar views on the regulatory position.
Speaking at an industry conference in Frankfurt, Bernardino said that regulators were seeing “a lot of talk, but not much walk” from insurance firms around Brexit preparations.
“I believe that it is now more than crucial that all insurance groups properly assess the risks of a ‘cliff edge’ scenario to their business and consider all possible solutions to mitigate them under the available regulatory framework,” he said.
EIOPA has urged firms to have a significant presence in the EU to be able to continue operating inside the EU and Bernardino has said before that “empty shells or letter boxes” would not be acceptable.
Tobin Ashby, a financial services expert at Pinsent Masons, said: “If insurers are not sufficiently prepared closer to Brexit, regulators will point to these statements and firms will not be able to argue that they were not aware of the issue.
“While there is still some hope for a political solution to the problem for cross-border financial services emerging from negotiations, firms need to be taking action to be ready for a range of outcomes if they are not doing so already,” he said.