The impact of Brexit on the UK insurance industry

What do you need to know about Brexit and its implications on the insurance industry?

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Brexit is happening on 31st January… or so we hope! After many months of debate, British MPs voted in favour of the Withdrawal Agreement Bill. So it’s more likely than not we’ll finally meet the latest Brexit deadline.

The transition period will conclude in December 2020. Up until this point, most arrangements between Britain and the EU will be unaffected.

Quick jargon buster

  • EU – The European Union is an economic and political partnership between 28 European countries (27 after Brexit). These countries cooperate on key issues and policies.
  • EEA – The European Economic Area is an agreement which enables non-EU member parties to participate in the EU’s single market.
  • EHIC – The European Health Insurance Card allows people from eligible countries access to free or reduced cost health treatment in EEA member states. The EHIC does not cover all medical treatments or medical repatriation back to the UK so travel insurance should be arranged to protect you for these eventualities.
  • EU27- Essentially the European Union countries involved in Brexit negotiations (all EU member states excluding the United Kingdom).

How will Brexit impact the insurance industry?

How Brexit will impact the industry is still unconfirmed as trading agreements are still to be put into place.

Currently, UK insurers have passporting rights to EU countries. It’s unclear whether, following Brexit, these passporting rights will remain in place.

Passporting rights allow firms registered in the EEA to do business in other EEA states without additional authorisation being given from each country.

Without passporting rights, UK intermediaries may not be permitted to place certain European risks with insurers. It’s worth noting that there might be a difference between individual insurers as each will have different regulatory permissions.

How do I know if I can sell insurance policies abroad?

Insurers and brokers will have different regulatory permissions, allowing them to place and accept different risks. You can check current permissions on the FS Register.

Many insurers have been restructuring their business for a while now, relocating or opening new branches of the business in EU member locations. This should allow them to continue to operate within the EU following Brexit, thus avoiding lost revenue or huge business disruption.

My clients are based abroad, how will Brexit impact them?

Property and businesses located abroad may be impacted by Brexit. UK insurers may not be able to use their passporting rights to underwrite the risk. This means insurers and brokers must check what’s required by local laws and regulations.

What happens to existing policies?

BIBA and the Worldwide Broker Network (WBN) have reached an agreement which connects BIBA member firms to another member firm in an EU state. This allows UK insurers and intermediaries to continue to work with clients based in the EU.

Brokers and insurers should, obviously, communicate with its customers regarding the impact of Brexit on any existing or new contracts. Any changes to their contract, including the validity of their insurance, any change or loss of cover, tax implication, changes to the claims handling procedure and more should all be communicated to the customer as soon as the insurer or broker becomes aware of any change.

Are insurance policies likely to change due to Brexit?

Insurers and brokers should have open, in-depth conversations with customers regarding Brexit. Some customers are stockpiling inventory, for example, in preparation for Brexit. This additional stock / value should be reflected in their policy.

What is the best result for insurers?

BIBA is campaigning for a future trading agreement that allows insurers and brokers to continue to service clients and risks located in EU countries.

A frictionless trade agreement could mean that current passporting rights to trade in the EU are replicated. This would be of great benefit to the financial services industry in the UK, as businesses could continue to underwrite risks located in EU countries.

What about staff members?

Insurers and brokers may employ EEA citizens wishing to apply to the EU Settlement Scheme. The deadline for applying is 30th June 2021. From an employer perspective, ‘right to work’ checks aren’t currently changing but do keep an eye on the latest news as in 2021 this could change.

If you’re travelling abroad for business

You will need to make sure you have at least six months of validity left on your passport. If you’re planning to drive in an EU country, you’ll need a Green Card to ensure your UK car insurance is valid. It’s also worthwhile arranging personal accident cover and motor legal expenses cover, in case you are involved in an accident with an uninsured or untraced vehicle abroad.

BIBA is calling for the UK to remain in the free-circulation zone so drivers won’t require a Green Card to drive in EU countries. However, if a Green Card is necessary, there are pressures on the Government to digitise the current system. Allowing Green Cards to be carried digitally is more convenient for travellers and generally much more sustainable.

Travellers must arrange adequate travel insurance. It’s worthwhile taking your EHIC with you, for now, but that should never be seen as a replacement for travel insurance. It may be that the EHIC regime will not continue following Brexit, so travel insurance will be necessary.

If you’re travelling abroad for business, check the Government’s advice.

How will Brexit impact Romero customers?

Romero Insurance Brokers don’t work within the EU. As a proudly independent broker, we have close relationships with insurers based here in the UK. This means our customers have total peace of mind that, when Brexit comes, their insurance policy won’t be affected.

How can I find out more?

BIBA’s Brexit microsite is the best way to find out up to date information.

Talk to us!

If you’d like to speak to an expert for advice on all things insurance, get in touch with our team.

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