We are grateful to David Coupe, Senior Partner of members EC3 Legal for the following clarification
Today, Friday 20th December, Parliament starts the process to get Brexit done.
The Withdrawal Bill will now pass through with many of the checks and balances introduced via amendment in the previous Parliament stripped out.
Crucially the commitment not to extend the transition period beyond December 2020 will be enshrined in the new Act.
So we now know to a reasonable level of certainty that UK will be completely outside EU by January 1st 2021. So probably worth reiterating that as things stand:
- During transition you can continue to service EU policyholders with EU risks as you do today.
- After December 2020, given the timescale and the lack of equivalence provisions in Insurance Distribution Directive, the only permissible model for servicing this business will be to create a subsidiary entity authorised by a local regulator in EU and that entity to have a branch in UK authorised by FCA.
- All other models – including wholesaling and reverse solicitation will not be allowed.
Brexit must be the most important event affecting the UK insurance industry in a decade.
The EU commission have been accused of intransigence and the UK government is in disarray with constant infighting, to the extent that many no longer trust what MPs are saying and even believing what they have said.
Moreover neither the UK regulators or the UK government have any idea of what businesses should do. This has been complicated by PRA expecting insurance firms to put into operation potential options post April, 2019.
Our main problem here is trying to resolve an answer to a question nobody knows.
Whilst it may be too early to decide what precisely to do, the MGAA has formulated a working group and will run a number of meetings looking at potential risks and the options open for MGAA members.
We have put together a series of documents for members to review and consider what their companies should do taking into consideration the potential cost, which could ultimately be a waste of important funds.