Brexit – is your insurance business ready?
The critical moment is approaching. From 1 January 2021, only an EU regulated insurance carrier or intermediary may undertake EU insurance work.
It is perhaps surprising that a number of companies are not yet ready for the effects of Brexit.
In the Lloyd’s market, from 1 October 2020, Lloyd’s Brussels will only accept new business from EU regulated brokers where the risk and the policyholder are in the EU. Similarly, Lloyd’s coverholders can only bind those EU risks if offered by an EU regulated intermediary.
Amongst the options available to UK insurance intermediaries and underwriters are:
- Establishing a new regulated insurance entity in an EU country to facilitate the provision of ongoing EU insurance services
- Entering into a joint venture with an appropriate EU regulated entity which would allow some continuation of insurance services but with limited contact and control of your clients,
- Transferring the run-off of the existing EU insurance business into to an appropriate EU regulated entity and ceasing to provide insurance services in the EU.
None of these options are without regulatory and tax impact. Ensuring the employment of appropriately qualified insurance staff in the EU entity, paying tax on the disposal or transfer of the insurance business and VAT on cross border services are just some of the hurdles faced.
Time is running out
The biggest challenge for any insurance business that has not yet restructured for Brexit, is the fact that that time is now limited. With only two months before the restrictions imposed by Lloyd’s apply and only five months before all EU passporting ceases, business need to make some quick decisions. Nevertheless, the fundamentals remain the same, if you want to look after your EU clients or see an opportunity in the EU, it’s not too late to set up an EU operation although interim measures may be required in the short term.
How we can help
We have helped many insurance entities establish their EU operation and integrate this with their existing UK business.
If you would like to talk through your options, please contact Howard Jones.