EIOPA Issues Recommendations for Insurers in Light of No-Deal Brexit
EIOPA issued recommendations for the insurance sector in light of UK withdrawing from EU without a withdrawal agreement. The recommendations, which are addressed to national competent authorities, provide guidance on the treatment of UK insurance undertakings and distributors with regard to cross-border services in EU after the withdrawal of UK from EU without a withdrawal agreement. The recommendations will apply as of the date following that on which the EU acquis ceases to apply to, and in, UK.
The recommendations provide guidance on the supervisory treatment of residual insurance business, with the objective to minimize the detriment to policyholders with cross-border insurance contracts. National competent authorities should ensure an orderly run-off of the insurance business, including the appropriate supervision. UK insurance undertakings without authorization should not conclude new insurance contracts. Furthermore, the recommendations provide guidance on the application of relevant legal provisions with regard to the cross-border insurance of UK insurance undertakings. Certain recommendations are also related to the orderly run-off, authorization of third-country branches, lapse of authorization, portfolio transfer, change in the habitual residence or establishment of the policyholder, cooperation between the national competent authorities, communication to policyholders and beneficiaries, and distribution activities.
Enhanced cooperation between national competent authorities is necessary to address issues arising from the unauthorized cross-border insurance. EIOPA will facilitate the necessary cooperation through the establishment of cooperation platforms. UK insurance undertakings should disclose the consequences for their rights and obligations to the policyholders and beneficiaries of contracts affected by Brexit. Guidance on the application of the legal framework for insurance intermediation regarding UK distributors after Brexit is also part of the recommendations.
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Keywords: Europe, EU, UK, Insurance, Brexit, Cross-Border Activities, Supervisory Convergence, EIOPA
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