The Bank of England’s Financial Stability Report throws up issue of cross-border insurance contracts
The Bank of England’s Financial Stability Report has pointed out the problem of cross-border contracts for insurers after Brexit.
To preserve cross-border contracts, according to the Financial Stability Report, legislation would be needed from both the UK and EU.
30 million European Economic Area (EEA) and six million UK policyholders could otherwise be affected.
The treasury is currently considering how to avoid this disruption, which could leave insurers faced with the choice of breaking the law or going back on a contract.
ABI director general Huw Evans commented: “Today’s report from the Bank of England is right to emphasise the impending threat of insurance companies not being able to service cross-border contracts after Brexit. This is an issue which could impact many millions of policies and other contracts and which needs addressing urgently via a political agreement to allow these policies to run on, to give customers certainty and to prevent financial upheaval. The last thing insurers want is to be left with the impossible choice of breaking a contract with a customer or to risk breaking the law.”
In September, several insurance big hitters joined the push for a Brexit transition deal to minimise the impact of the UK’s exit from the EU on “communities, employees, firms and our nations”.