EIOPA Urges Insurers to Prepare for End of Brexit Transition
In a recent communication, EIOPA urged the insurance sector to complete its preparations for the end of the Brexit transition period on December 31, 2020. After this date, all EU primary and secondary law will no longer apply to the UK, including the Solvency II Directive and the Insurance Distribution Directive. The insurance sector needs to be prepared for the consequences of UK and Gibraltar insurance undertakings becoming third-country undertakings and no longer benefiting from the Solvency II authorization to provide services in EU. As informed by EC to stakeholders in a July notice, the sector also needs to be prepared for other legal repercussions concerning insurance contracts, insurance disclosure, and group supervision.
EIOPA urged the insurance sector to finalize preparations and implement suitable and realistic contingency plans in advance of the end of the UK transition period. EIOPA expects insurance and reinsurance undertakings to have measures in place to prevent insurance activity without authorization and ensure service continuity of cross-border business, as specified in the EIOPA Opinion issued in 2017, to minimize the detriment to policyholders and beneficiaries. EIOPA also reminds insurance undertakings and insurance intermediaries of their duty to inform customers about the possible impact of the withdrawal of the UK from the EU on insurance contracts. EIOPA will continue to monitor the preparations of the sector and in particular the development and implementation of contingency plans. The previously agreed Memoranda of Understandings on cooperation and information exchange concluded by EIOPA, and all national competent authorities of the European Economic Area with competencies in the insurance sector, with BoE in its capacity as the Prudential Regulation Authority and with FCA remain valid and will come into effect on the date the European treaties and secondary legislation have ceased to apply in the UK.
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Keywords: Europe, EU, UK, Insurance, Solvency II, Brexit, IDD, Insurance Contracts, Brexit Transition, Equivalence Regime, Authorization, Group Supervision, EIOPA
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