The agreement between the European Union and the United Kingdom on its withdrawal from the EU became law in the UK on 23rd January 2020. Consequently, the United Kingdom ceased to be a member of the EU on 31st January 2020. The transition period provided for in the Withdrawal Agreement is set to end on 31st December 2020. No further agreements between the EU and the UK have yet been reached, but regulations for the financial sector were adopted back in 2018.
Of major importance to the insurance industry is the Temporary Permission Regime (TPR):
For insurance policies concluded with EU insurers involving risks situated in the UK and, therefore, activities regulated by the Prudential Regulation Authority (PRA), this means that EU insurers
- are no longer allowed to insure risks in the UK without TPR authorisation;
- who can show they have TPR authorisation may therefore, according to the wording of the regulation, continue insurance policies until 31st December 2023.
Insurance policies under a) renewed from 1st January 2021 onwards may therefore no longer include cover for risks situated in the UK. This is why it is urgently recommended that proper rules be duly provided, if necessary in line with existing regulations applicable to all other Non-member states.
Whether EU insurers will, after 31st December 2023, be allowed to make compensation payments to UK recipients, without any bearing on tax, for losses occurred up to this date is not entirely clear from the agreements in place so far. Therefore, in the event that BREXIT goes ahead without further official regulations being put in place, it is urgently recommended that – despite the existing TPR – business and risk-specific requirements be examined in order to be as certain as possible that the best possible regulations can be agreed for the insurance protection required for UK risks.