Home»Regulatory»EIOPA Recommendations for a No-Deal Brexit

EIOPA Recommendations for a No-Deal Brexit

Print This Post

The European Insurance and Occupational Pensions Authority (EIOPA) in February 2019 issued recommendations for the insurance sector in case the United Kingdom (UK) withdraws from the European Union without a withdrawal agreement.

The recommendations, addressed to National Competent Authorities (NCAs), i.e. local regulators, provide guidance for the treatment of UK insurance companies and distributors with regard to cross-border services in the European Union.

The recommendations will apply as of the date following the cessation of the European Union’s acquis in the United Kingdom. If the UK withdraws from the EU without ratification of the withdrawal agreement on 30 March 2019, the UK will become a third country and UK insurance companies and distributors will lose their right to conduct business across the EU27 Member States by way of freedom of establishment and freedom to provide services.

See also: Brexit Timeline: Key Dates

In principle, insurance contracts concluded before that date by UK insurance companies in the EU27 are valid after that date. However, the insurance company would no longer be authorized to carry out insurance activities with regard to these cross-border insurance contracts.

The recommendations are also meant to provide guidance on the supervisory treatment of residual insurance business with the objective of minimizing the detriment to policyholders with cross-border insurance contracts.

NCAs should ensure an orderly run-off of the insurance business, including appropriate supervision. UK insurance companies without authorization should not write new insurance contracts.

Furthermore, the recommendations provide guidance on the application of relevant legal provisions with regard to cross-border insurance. The nine recommendations range from the authorization of third country-branches, the lapse of authorization, the cooperation between the national competent authorities, the communication to policyholders and beneficiaries to distribution activities.

Three recommendations should be of particular interest:

  • Orderly run-off: Without prejudice to policyholder rights to exercise an option or right in an existing insurance contract to realize their pension benefits, the NCAs should prevent that UK company from concluding new insurance contracts or establishing, renewing, extending, increasing or resuming insurance cover under the existing insurance contracts in their jurisdiction as long as they are not authorized for such insurance activities under Union law.
  • Portfolio transfer: Provided that it was initiated before the withdrawal date, the NCAs should allow the finalization of portfolio transfer from an UK insurance company to an EU27 insurance company.
  • Change in the habitual residence or establishment of the policyholder: If a policyholder with habitual residence in the United Kingdom has a life insurance contract with an UK insurance company and changed their habitual residence to a EU27 member state, the NCAs should hold the view that the insurance contract was concluded in the United Kingdom and the UK insurance company did not provide cross-border services.

Enhanced cooperation between NCAs is necessary to address issues arising from unauthorized cross-border insurance. EIOPA will facilitate the necessary cooperation through the establishment of cooperation platforms. UK insurance companies should disclose the consequences for their rights and obligations to the policyholders and beneficiaries of contracts affected by the United Kingdom’s withdrawal.

EIOPA had issued an opinion on 21 December 2017, calling on the NCAs to ensure that insurance companies with affected cross-border business develop realistic contingency plans, and setting out measures to prevent insurance activity without authorization. The opinion also called for ensuring service continuity after the United Kingdom’s withdrawal and the implementation of those measures.

Many UK insurance companies, especially those with cross-border business in the EU27, have already taken action and are implementing contingency measures; however, there is a residual amount of insurance business in the EU27 for which UK insurance companies have not taken appropriate measures. As of November 2018, the tally amounted to 124 UK insurance companies, representing about 0.16% of the total insurance business in the EU27.

The Recommendations can be obtained via EIOPA’s Website (PDF download).


The European Insurance and Occupational Pensions Authority (EIOPA) has so far issued the following opinions linked with the withdrawal of the United Kingdom from the European Union:

  • 5 November 2018 – EIOPA calls for immediate action to ensure service continuity in cross-border insurance
  • 28 June 2018 – Opinion addressed to national supervisory authorities about the duty of insurance company and insurance intermediaries to inform customers about the possible impact of the withdrawal of the United Kingdom from the European Union
  • 18 May 2018 – Opinion on the solvency position of insurance and reinsurance company in light of the withdrawal of the United Kingdom from the European Union
  • 21 December 2017 – Opinion on service continuity in light of the withdrawal of the United Kingdom from the European Union
  • 11 July 2017 – Opinion on supervisory convergence in light of the United Kingdom withdrawing from the European Union
Previous post

OECD Podcast on Social Protection and the Gig Economy

Next post

Martine Ferland New CEO at Mercer