Lockton releases Brexit Update in light of May’s extension
With the United Kingdom’s departure from the European Union delayed until May 22, 2019, if the Brexit deal is accepted, or April 12, 2019, if rejected, many clients of the insurance industry are unsure of what to do in either case.
Lockton in March 2019 released an advisory: Brexit update: What US multinational employers need to know to help its clients and others in the industry during these extended periods of uncertainty.
At issue is the form that Brexit should take, whether it is a trade relationship with close regulatory and legal alignment (soft Brexit); or no agreement (hard Brexit), leaving the UK to work out its own trade deals. A hard Brexit stands to cause delays at borders, hindering delivery of essential food and medicine as well as other goods.
The briefing states:
The insurance industry has responded to the potential loss of the ability to pass services freely across borders within the EU by adapting their business models and ensuring with little exception that customers in both the UK and elsewhere in the EU can continue to be served.
This has come at considerable cost, with some estimating more than USD 500 million has been spent on Brexit planning by the UK insurance industry.
As a comment, even if an insurance carrier has taken step to ensure service on both sides of the English Channel, contracts may still need to be adjusted. For example, UK and non-UK risks may have to be covered by two separate policies, one placed with an UK insurer and the other with an EU-based insurer. Even when both belong to one same insurance group, this adds to cost and complexity.
The Lockton update advises multinational employee benefits professionals with operations in the EU to prioritize citizens’ rights, travel insurance, and insurance purchasing. Multinationals might consider seeking professional support and assistance as they may be caught up in shifting, as yet unknown regulations.
The complete advisory is viewable here.