Resolving Brexit issues for global insurance programmes

For UK and European companies, Brexit was a huge issue, beset with uncertainty and confusion, particularly at the political level. But then along came the pandemic, which easily topped Brexit for uncertainty and confusion. Brexit is done, apparently, but there are still many issues to be dealt with, not least in the financial services sector.

So is Brexit still an issue for UK and European companies when it comes to their insurance programmes, or has this issue largely been resolved? It appears that insurers, certainly the big players in the global programme market, were quick to ensure that they had operations in each camp and were able to make arrangements to ensure multinational customers weren’t unduly affected. Words like seamless, continuity, integrated and transparent were liberally used by insurers to reassure customers that all would be well.

And by and large it seems to have worked. Brokers and others report that insurers have ensured a smooth transition. As Daniel Trautner, head of Aon Global, commercial risk solutions, health solutions and affinity, explained: “At this moment in time, the industry has reacted well and Brexit has been managed well on both sides of the English Channel. However, regulations will almost certainly change and this means that there can be no complacency and firms will need to ensure that they manage any current and future cross-border regulatory issues in the best way they can to provide protection and assurance for their clients.

Karen Jenner, portfolio director, business development, TMF Group noted that the insurance market has been preparing for this for some time, with insurers setting up branches to deal with the regulatory changes and facilitate cross-border insurance most effectively post-Brexit. “From an IPT perspective, the UK leaving the EU causes less issues for European insurers writing into the UK than for those UK insurers without European subsidiaries to facilitate [Freedom of Services] policies,” she said.

Some other minor areas may cause concern, according to Jonathan Drake, partner, regulatory, compliance and investigations, DWF Law. “Brexit continues to highlight some particular specific cross-border insurance issues but these are largely technical ones and my sense is that Brexit has largely been resolved from the perspective of cross-border insurance programmes. However the ongoing dialogue over the future of UK/EU financial services generally may give rise to further issues,” he said.

And Monica Karmasin, senior client development manager at Axco, pointed out that passporting rights and Freedom of Services (FoS) policies aren’t the only important considerations when building multinational programmes. “We have become accustomed to considering the implications of transferring – or processing – personal data on a cross-border basis, and ensuring compliance with the EU GDPR post-Brexit,” she said.

Insurers response
As for insurers, the vast majority began planning for this long before the politicians came to any sort of decisions. “Most insurance companies and clients have established or, like AIG, already executed a plan to ensure a smooth transition post-Brexit,” said Karen Jury, UK head of multinational, AIG. “The most recent challenges faced by clients deal with using their European captive to write directly into the UK, as they would have to apply for a specific licence post-Brexit, with capital and other requirements. The alternative is to use a fronting partner in the UK.”

Ayleen Frete, global head of market practice management, global client services and multinational, AGCS SE, said Brexit remains important to UK and European companies. “However, global insurers have been working together with customers for some time to ensure that all insurance programme structures are compliant,” she said. “It is still essential to see how insurers can respond to claims in the region following Brexit, and if there are any further adjustments to Brexit-related regulation.”

Bruno Laval, chief distribution officer, APAC and Europe, and regional manager, European markets, AXA XL, said that overall, it seems the situation has been largely resolved for European insurers that anticipated it. “In particular, the temporary permissions regime allows companies that operated into the UK with a European passport before Brexit to keep doing so until 2023 and non-admitted solutions are still available,” he pointed out. “Good anticipation of this challenge by major carriers has guaranteed a continuity of service for their clients.”

Tim Galloway, divisional leader for multinational, QBE Europe, said he believes the position is fairly stable at the moment. “Clearly, individual customers’ experiences will differ depending on what solutions their insurer and broker have adopted but, on the basis that the transition arrangements seem likely to be in force for a while, I don’t envisage a significant impact in the immediate term,” he said, adding that there may be some more disruption depending on how the regulatory landscape changes in the future.

André Rohlmann, general manager of the International Network of Insurance, said that prior to Brexit, the network spent some months ensuring that its UK partner would have the necessary resources in place once the option of FoS would no longer be available. “Since Brexit, we have managed to maintain a good level of service and ultimately it has been the decision of our network partners whether to replace their existing FoS programmes with a controlled master programme approach or to discontinue writing the account altogether. Until now, there have been no new (reinsurance) restrictions imposed by the UK regulator that would impede our approach, but we continue to monitor the situation and will adapt our service offering if need be,” he said.

Commercial Risk is hosting the Global Programmes Conference on 14-16 September 2021. The event will examine regulation and coverage. Click here to secure your seat at the event.

Back to top button