Insurance undertakings are responsible for fulfilling their insurance obligations, as part of the sound and prudent management of their business, the European Insurance and Occupational Pensions Authority (EIOPA) has stressed, releasing an Opinion article to underline the importance of sufficient and timely preparation in light of the UK’s departure from the European Union.
“In particular they are required to assess the possible impact of any changes in the legal environment on their operations and to identify and assess compliance risk,” read EIOPA’s Opinion on service continuity in insurance. “The withdrawal of the UK from the European Union results in such changes in the legal environment.
“Insurance undertakings are also required to take reasonable steps to ensure continuity and regularity in the performance of their activities, including the development of contingency plans.”
Steps may include the transfer of contracts of UK undertakings with policyholders in the EU27 to an insurance subsidiary established in a member state; the transfer of insurance contracts of EU27 undertakings with UK policyholders to an insurance subsidiary established in the UK; the establishment of a third country branch in the UK or in the EU27 member state of the policyholder; and, for UK undertakings in the legal form of a European company, the change of domicile.
National supervisory authorities are also urged to take appropriate action to ensure that insurance undertakings are adequately prepared. In close cooperation with these supervisory bodies, EIOPA will monitor the development and implementation of contingency plans.
“It is essential that insurance undertakings consider all eventualities, including the possibility of no political agreement at the date of withdrawal,” said EIOPA chairman Gabriel Bernardino. “I call on all insurance undertakings and national supervisors to plan effectively and take the necessary steps in good time to ensure that policyholders and beneficiaries are not exposed to unnecessary uncertainty regarding the status of their contracts.”
Meanwhile EIOPA has established a high-level cooperation platform for supervisory authorities to exchange information and facilitate cooperation on Brexit-related topics, including the service continuity of cross-border business.
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