Brexit: Implications for General Insurance [January 2020 Update]
05 January 2021
05 January 2021
Policy and Public Affairs
The UK has formally left the European Union and has signed a trade deal with the EU.
Although the trade deal is in place the level of detail around insurance and the mutual recognition of qualifications is very limited.
For some time, we have known that the UK’s participation in the single market for financial services would end with Brexit.
The plan was for the UK to achieve regulatory ‘equivalence’ with the EU, through existing legal mechanisms that allow financial services firms from countries such as the US and Switzerland to avoid regulatory duplication in their EU operations. For example, if a group of insurance companies is headquartered in an ‘equivalent’ country, EU supervisors may rely on supervision that takes place in the equivalent country rather than insisting that the same supervision also takes place in the EU.
However, there is no current mechanism for equivalence for insurance brokers in EU law. In addition, the trade agreement does not cover equivalence for insurance companies either – although the UK hopes to achieve this in 2021 through further talks with the European Union. To further this process, in November 2020 the UK Government unilaterally declared EU insurance companies operating in the UK as equivalent for Solvency II purposes.
The new trade deal does not guarantee recognition for UK citizens working in Europe. Instead, it is up to each individual country in the EU to decide which qualifications to recognise – for example, the Central Bank of Ireland currently recognises some CII qualifications (see https://www.centralbank.ie/regulation/how-we-regulate/authorisation/minimum-competency/qualifications).
The trade agreement does provide guidelines for the production of joint recommendations by professional bodies and authorities, but they are ‘non-binding’. These guidelines will be ‘taken into account by the Partnership Council [of EU and UK authorities] when deciding whether to develop and adopt arrangements’.
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.