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The Recommendations will apply as of the date following that on which the European Union’s acquis ceases to apply to and in the United Kingdom.
In case the United Kingdom withdraws from the European Union without ratification of the withdrawal agreement, on 30 March 2019 the United Kingdom becomes a third country and UK insurance undertakings and distributors lose their right to conduct business across the EU27 Member States by way of freedom of establishment and freedom to provide services. In principle, insurance contracts concluded before that date by UK insurance undertakings in the EU27 are valid after that date. However, the insurance undertakings would not anymore be authorised to carry out insurance activities with regard to these cross-border insurance contracts.
On 21 December 2017, EIOPA issued an Opinion, calling on the NCAs to ensure that insurance undertakings with affected cross-border business develop realistic contingency plans setting out measures to prevent insurance activity without authorisation and ensuring service continuity after the United Kingdom’s withdrawal and the implementation of those measures. Many UK insurance undertakings, in particular with large 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 undertakings have not taken appropriate measures - as of November 2018, 124 UK insurance undertakings, representing about 0.16% of the total insurance business in the EU27.
The Recommendations provide guidance on the supervisory treatment of residual insurance business with the objective to minimise the detriment to policyholders with such cross-border insurance contracts. NCAs should ensure an orderly run-off of the insurance business, including the appropriate supervision. UK insurance undertakings without authorisation should not conclude new insurance contracts.
Furthermore, the Recommendations provide guidance on the application of relevant legal provisions with regard to cross-border insurance of UK insurance undertakings. The nine Recommendations are ranging from the authorisation of third country-branches, the lapse of authorisation, the cooperation between the national competent authorities, the communication to policyholders and beneficiaries to distribution activities.