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Post-Brexit contract ‘grandfathering’ vital: Insurance Ireland

Insurance Ireland has renewed calls for existing contracts spanning the post-Brexit border to be recognised after March 2019 amid signs of European Commission (EC) intransigence on the issue.

The trade body's CEO, Kevin Thompson, is one of the few EU-27 industry figures to have spoken on an issue which could affect an estimated 10 million policyholders in the UK and 38 million EU-27 customers of UK insurers.

Unless local regulators make provision for existing contracts to be recognised, or "grandfathered", insurers which lose their EU-27 authorisation would, in some jurisdictions, be acting illegally if they paid claims.

Thompson said: "From the very outset our approach was about providing certainty for existing customers and trying to ensure stability."

In the UK the Treasury has already said that it will legislate to ensure consumers can receive payments from EU-27 insurers.

However, the EC has not yielded.

Insurance Europe director general Michaela Koller last month told delegates at the Association of British Insurers' conference that EC officials consider the problem to be smaller than some suggest, given that many policies only last a year.

For the remaining contracts the EC wants carriers to resolve the impasse by establishing subsidiaries in the EU and using Part VII portfolio transfers.

The UK is the second biggest market for Irish insurers, which passport into 110 countries serving 25 million consumers, Thompson said.

"We represent the Irish market and I think it is incumbent on us regardless of what we hear and what we don't hear to keep pushing at a national level with our regulator and with Eiopa to state our case. We are trying to provide a common sense approach that will help negotiations."

Insurance Europe is lobbying directly with the EC on behalf of the region's insurers.

"We follow their lead but we've got a bit of a journey," said Thompson.

Thompson's organisation has also joined the UK financial services industry in calling for a transition period after Brexit.

"It anchors on our point about bringing stability from a consumer point of view. Sometimes our industry is just seen as institutions but sitting behind that are customers," he said.

Dublin lost out when Lloyd's a year ago opted to establish its post-Brexit hub in Brussels rather than the Irish capital.

Lloyd's choice sparked some domestic criticism of the Central Bank of Ireland (CBI), which had insisted that the new entities have management "substance" within Ireland.

Since then specialty carriers including XL Group and Chaucer, and protection and indemnity clubs including North and The Standard Club have opted for the Irish capital.

Thompson defended the CBI's approach, noting that it was ahead of other regulators in issuing licences.

"The strengths of our jurisdiction have slowly but surely been established," said Thompson.

It is not clear how XL's $15.3bn takeover by Axa will affect its plan to move its European headquarters to Dublin from London.

 

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