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EU watchdog signals no Brexit action by EU needed for insurance contracts
[LONDON] There is no threat to European Union financial stability from insurers in Britain and Gibraltar that have yet to shift contracts with EU customers to the bloc in case of a hard Brexit, an EU watchdog said on Monday.
The European Insurance and Occupational Pensions Authority (EIOPA) said the biggest insurers in Britain and Gibraltar are shifting nearly 30 million contracts with European Economic Area (EEA) customers to ensure "continuity" in case Britain crashes out of the EU without a withdrawal deal next March.
This left 9.1 million EEA customers still facing potential uncertainty and delays in payments on their policies - business worth 7.4 billion euros (S$11.6 billion) and mostly centred on a handful of UK insurers, EIOPA said in a statement.
But 75 per cent of the contracts concerned have average premiums of less than 100 euros a year.
"Only 3 per cent of the potentially affected policyholders have a contract with life insurers," EIOPA said.
Based on this data, EIOPA said it saw no threat to EU financial stability, and that it was working with national regulators to deal with the "residual" risk.
The European Commission has said it is up to the insurers themselves, and not the bloc, to deal with cross-border insurance policies. The Bank of England has called for urgent EU action to mirror legislative steps being taken in Britain.
Britain and the EU are negotiating a divorce settlement that would include a business-as-usual transition deal lasting from next March to the end of 2020, which would ease concerns about contract continuity.
Nausicaa Delfas, executive director of international at Britain's Financial Conduct Authority, told Reuters on Monday that it was not just the European Commission that could take action to mitigate a hard Brexit.
"There could be areas where national competent authorities make decisions, say about insurance contracts. They have their own systems of law and they can do that," Ms Delfas said.
The Association of British Insurers said it "beggars belief" that EIOPA was still calling for the UK insurance sector to solve the problem of contract continuity under a hard Brexit.
"We've said it time and time again – there is a simple solution. British authorities are committed to it. All the EU authorities have to do is to reciprocate," said Hugh Savill, the ABI's director of regulation.
"Quite why they are unwilling to provide this peace of mind to millions of EU policyholders is hard to fathom."