The clause addresses the uncertainty of contracts written by its London-based entities after the March 2019 deadline
Contracts written by XL’s London-based entities prior to Brexit may become void as a result of a change in passporting rights. XL’s clause hopes to address this risk.
It is proceeding with the same clause it wrote in September 2017, as the recent deal between XL and AXA will not affect plans.
The clause will be included in policies written by Catlin Insurance Company UK (CICLUK), and XL Catlin’s syndicate 2003 at Lloyd’s.
These two entities will remain in the UK after XL Insurance Company SE (XLICSE) – XL Group’s main insurance company platform for within Europe – moves to Dublin, subject to regulatory approvals.
XLICSE’s policies do not need to rely on the clause.
XL Catlin’s clause is the same as the standard London Market continuity clauses, but with a few differences:
- The clause makes XLICSE an additional party to the policy from inception as a contingent insurer with the aim of providing continuity of cover for clients
- If post-Brexit, a policy’s performance becomes impermissible in any way and cannot be amended to enable CICLUK or the Syndicate 2003 to perform it, XLICSE will automatically be contractually obliged to perform it or any part of it.
- If XLICSE cannot perform the policy, only then is it automatically cancelled with a pro-rata return of premium (subject to no claims having been notified).
Paul Greensmith, UK Country leader & director of London Market Wholesale for XL Catlin said: “Our innovative clause offers a significant advantage by minimising the risk that policies will be cancelled, by making XLICSE a contingent party to the policy. Effectively, XLICSE will act as a back-up.
”A political solution may yet be forthcoming that ensures policies can be performed post-Brexit, but in the absence of one we believe this clause gives our clients and brokers the certainty they expect and deserve from their insurance partner.”