What will be the impact of Brexit on insurance?

 

Insurer Entity Restructures

 

For UK domicile businesses that are undertaking work in the EU, the territorial limits of policies should not change and we would not expect there to be any issues. 

 

At the moment, some Insurers, such as Aviva are able to ‘Passport cover’, under ‘Freedom of Services’, placing cover for property, and public and products liability for entities based in other EU/EEA Countries by including them on the master policy issued in the UK and paying the relevant tax in the entities domicile country.  The outcome of whether this will still be possible post Brexit is unclear.

 

You should find the following link of interest which explains the passporting of cover and includes a useful video….

 

https://www.growthbusiness.co.uk/brexit-will-impact-uk-insurance-industry-2548836/

 

Insurers & Lloyds are preparing for various outcomes and in some instances have arranged for offices in the EU & EEA territories and have also restructured their UK Entities in preparation.  

 

For example Aviva Insurance Limited will transfer the parts of policies where risks are situated in the EU/EEA from Aviva Insurance Limited to Aviva Insurance Ireland DAC.  Purely a transfer between companies within the Aviva group.

 

Motor Insurance - Green Cards

 

Another area that may change is that Green Cards may be required again, for using vehicles outside of the United Kingdom, rather than having EU Certificates of Motor Insurance.

 

The following is an extract from The British Insurance Brokers Association (BIBA) , with regards to the possible outcome of a ‘No Deal’:

 

Update from BIBA on Green Cards post 29 March 2019.

 

“In line with many other HM Government departments the Department for Transport (DfT) are planning for the possibility of a ‘no deal’ ‘hard’ Brexit and have called on the insurance industry to make preparations to assist UK motorists and companies using their vehicles in Europe after 29 March 2019.

 

They have issued a technical bulletin ‘Vehicle insurance if there’s no Brexit deal’, please see – https://www.gov.uk/government/publications/vehicle-insurance-if-theres-no-brexit-deal/vehicle-insurance-if-theres-no-brexit-deal

 

Post EU Exit UK motor insurers will continue to be required to provide third party motor insurance for motorists driving in EU countries.  Currently, as an EU member, UK motorists are not required to carry a Green Card to evidence this cover, but in the event of a ‘no deal’ ‘hard’ Brexit, this position may change and UK motorists may be required to carry a Green Card, as proof of third party motor insurance, whilst driving in EEA countries, plus Andorra, Serbia and Switzerland.

 

The UK will remain part of the Council of Bureaux (CoB) , following commitments by the UK government, and will remain within the Motor Insurance ‘Free Circulation Zone’, but this is subject to formal approval by the European Commission (EC).  We understand that the EC advise that the approval will not be given separately to the overall negotiations for the UK’s exit from the European Union and is subject to the EC’s ratification of any deal eventually agreed.

 

BIBA understands that, as part of CoB procedures, the UK Motor Insurers’ Bureau (MIB) may have to negotiate bilateral agreements with each of the MIB equivalents in the 30 countries in the EEA. These agreements ensure that all EEA countries will recognise Green Cards issued for UK motorists travelling abroad and the same will be true for foreign motorists entering the UK.

 

BIBA’s key message to members is to engage with your motor insurer partners to understand what preparatory steps they are making in order to be able to provide Green Cards to your customers driving in the EU post 29 March 2019.

 

Our understanding is that the format and pantone of a Green Card is set out in Council of Bureaux (CoB) rules and that a paper copy must be provided   This means that delivery of a Green Card via a Software House is unlikely to be a solution.   Currently it is not possible for a Green Card to be made available electronically to customers, for an example via an App.

 

In respect of business vehicles towing a trailer travelling on the continent, BIBA understands that some EEA countries (and other CoB members) may require a separate Green Card to be issued for a trailer, rather than the towing vehicle and trailer being shown on one Green Card.  The UK Government has recently enacted the Haulage Permits and Trailer Registration Act 2018 (see – http://www.legislation.gov.uk/ukpga/2018/19/enacted ), partly to enable UK trailers being used abroad to be registered.

 

CoB rules require a Green Card to be made available free of charge, but do allow administration costs incurred for the production and supply of a Green Card.”

 

Premiums and Rating

 

Another area that is not clear is the impact on capacity in the insurance market, however at this stage, the likelihood of insurance rates hardening as a result, is not envisaged. 

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