News

Brexit: what happens next?

30-01-2020

 

This communication is intended for coverholders, brokers and clients. 

 

Implications of Brexit

On 31 January 2020, the UK will formally leave the EU and enter a transition period till 31 December 2020. During the transition period when UK and the EU will negotiate their future relationship and agreement, EU law will continue to apply in and to the UK.

Following the end of the transition period, China Taiping (UK) will no longer benefit from EU passporting provisions and will no longer have permission to underwrite European Economic Area (EEA) insurance business. However, China Taiping Group are in the process of setting up an EU subsidiary in order to continue to serve the EU market.

 

Post-Brexit structuring requirements for intermediaries (including coverholders and brokers)

On 19 February 2019, the European Insurance and Occupational Pensions Authority (EIOPA) issued Recommendations for the insurance sector in light of the UK withdrawing from the EU. As a result of its interpretation of the Insurance Distribution Directive, intermediaries and entities carrying on distribution activities to EU policyholders seeking cover for EU risks will be required to be established and registered in the EU following the end of the transition period. In meeting this requirement, many UK intermediaries have established an EU-authorised intermediary with a UK branch, also known as reverse branching.

 

New and renewing policies

Passporting rights will continue to apply during the transition period, allowing our underwriters and UK intermediaries to continue to service existing EEA policies, including the payment of valid insurance claims. However, we will not renew or underwrite any new EU risks after 31st December 2020; subject to any future agreement between UK and EU.

 

Motor Insurance and Personal Accident / Travel Policies

As mentioned earlier, existing EU Law will continue to apply to policies and therefore where the currently extend to include driving and travel in the European Union, this will continue to be the case throughout 2020. However, it is highly likely that different laws and regulations will apply to UK policyholders travelling in the European Union from next year, depending on the outcome of negotiations between the UK and EU. Further notices will be provided as the outcome of these negotiations become known.      

 

Post Brexit Services including Part VII transfer of Existing EU based Policyholders

Where relevant to achieve contract continuity, China Taiping UK will either transfer affected EU policies to the Group’s new EU subsidiary; or may avail itself of legislation in certain EU territories that permits and supports China Taiping (UK) to continue to service existing policy contracts.

 

Where business is to be transferred to the Group’s new EU subsidiary, this will be undertaken via an insurance business transfer under Part VII of the UK’s Financial Services and Markets Act 2000 (the Part VII transfer) and is scheduled to take place in the next 12 months.