It looks like Lloyd’s of London is ready for any Brexit eventuality.
In an update, the insurance market confirmed its ability to write facultative reinsurance and non-proportional excess of loss treaty reinsurance on Lloyd’s Brussels paper from January 01 next year across all markets in the European Economic Area (EEA). In addition, it announced its readiness to process the remaining treaty reinsurance business through Lloyd’s Brussels from January 01, 2020, in the unlikely scenario that the UK does not secure Solvency II reinsurance equivalence in 2019.
“We expect that, following Brexit, the UK will apply for and receive Solvency II reinsurance equivalence,” said Lloyd’s chief commercial officer and Lloyd’s Brussels chief executive Vincent Vandendael, who is set to join Everest Insurance next year. “However, we are working to ensure that our reinsurance customers can continue to access the market’s specialist policies in the event that the UK leaves the EU without a transitional agreement or equivalence.”
Lloyd’s said the market can continue to write reinsurance in the EEA states until March 29, 2019 with the confidence that all valid claims will be paid. “After this date, if transitional arrangements or equivalence are in place, the market can continue to do business via syndicate paper as they do today,” it noted.
The good news is, even without transitional arrangements or equivalence, Lloyd’s Brussels will be able to write facultative reinsurance and non-proportional excess of loss treaty reinsurance EEA-wide come January. Lloyd’s said the remainder of the treaty reinsurance business can be written as cross-border business on syndicate paper from EEA states under World Trade Organisation terms, with the exception of Germany and Poland.
“Along with other London Market partners, we continue to strongly make the case that an EU equivalence decision with respect to the UK’s reinsurance framework should be secured as soon as possible and by no later than the end of the transition period,” added Vandendael. “It is clear from the UK government whitepaper that the UK government aims to achieve Solvency II equivalence of the UK reinsurance regime.
“We will know before March 29, 2019 whether we have transitional arrangements. This, alongside the solutions we are working on, the market’s strong customer relationships, and the commitment to pay all valid claims, will all help us maintain and grow our business partnerships across the EEA.”
