MP writes to chancellor to spur action on Brexit-hit insurance contracts
Treasury Committee chair Nicky Morgan MP has written to Chancellor Philip Hammond urging him to take action on policies sold in Europe by UK insurers under European Economic Area (EEA) passporting rules.
Morgan pointed out that if action is not taken, UK insurers will lose the legal authorisation to service the “hundreds of thousands” of these cross-border policies once the UK leaves the European Union on 29 March 2019.
She has asked Hammond to clarify by 21 September whether the Brexit-hit insurance contracts issue will be dealt with in the first phase of the Brexit negotiations, and what proposals are being considered to preserve the stability and certainty of cross-border insurance contracts that straddle the exit date.
She has also asked whether the government will publish a position paper on the question.
Morgan wrote: “UK insurers could establish a subsidiary elsewhere in the EEA, and use the provisions of Part VII of the Financial Services and Markets Act 2000 to transfer the contracts to the new entity; but quite apart from the sot costs involved, there may be insufficient time to do so, particularly if, as the PRA expects, the courts receive a significant increase in the volume of Part VII transfer requests.”
She added: “As I’m sure you will be aware, the implications of insurers being unable to honour cross-border contracts are potentially serious.”
The ABI has welcomes Morgan’s letter. ABI director general Huw Evans said: “This is a shared challenge for the EU and UK and a vital issue for millions of our customers. We have been urging all sides to address it as a matter of urgency and agree on a reciprocal solution.
“Without a resolution insurers will face a choice between breaking their promise to customers or risk breaking the law. It must not come to this.”