Brexit - Insurance

As of the end of the Brexit transition period, on 1 January 2021, UK insurance undertakings and intermediaries can no longer rely on the European passport to provide activities of insurance (distribution) throughout the European Economic Area (EEA). Likewise, EEA regulated entities have lost, in principle, access to the UK market (unless they can rely, for example, on the UK temporary permissions regime).

However, insurance contracts are not terminated because of the loss of authorisation and remain in place under the same contractual conditions.

The EU-UK Trade and Cooperation Agreement does not establish a transitional arrangement for insurance. Therefore, UK regulated entities must either establish a subsidiary in the EEA or rely on national transitional Brexit arrangements in each Member State where they carry out regulated activities (if any). 

In Belgium, the legislator has put in place a transitional arrangement for insurance undertakings and intermediaries. However, the transitional arrangement only provides authorisation to manage insurance contracts concluded before 1 January 2021. Furthermore, regulated entities intending to rely on the transitional arrangement must comply with strict conditions, such as the submission of a comprehensive notification dossier to the Belgian competent authority, i.e. the National Bank of Belgium (NBB) for insurance undertakings and the Financial Services and Markets Authority (FSMA) for insurance and reinsurance distributors.

The Brexit Law assigns additional authority to the King to establish a broader transitional arrangement that is not limited to run-off business but also comprises the conclusion of new contracts during the process of application with the competent authority. However, the King has not yet published a Royal Decree implementing this broader transitional arrangement.

Insurance undertakings and intermediaries intending to carry out activities in the EEA market should consider establishing a subsidiary in the EEA and apply for an authorisation to carry out regulated activities with the competent authorities.

In case they have already obtained such authorisation, they should verify whether their insurance distribution network only comprises registered insurance intermediaries and, where necessary, terminate distribution agreement with entities that have lost their authorisation in the EEA. Furthermore, they should consider verifying whether Brexit imposes other risks to their business, in particular when outsourcing activities to or otherwise cooperating with (affiliated) UK entities.

If the regulated entity intends to rely on national transitional Brexit arrangements, it should carefully analyse the applicable eligibility criteria and formal requirements. There are significant differences between the EEA Member States, both in terms of the territorial, personal and material scope of the transitional arrangements and the requirements to benefit from the arrangement. 

Given the complexity of all of the above steps, we recommend seeking specialised advice when implementing Brexit solutions.