Brexit: How might this affect your insurance?

Originally posted on CMJ Insurance brokers.

Currently, the UK is due to leave the European Union on 29 March 2019.

From an insurance market perspective, there are concerns regarding

• The possibility of ‘loss of passporting rights’ (the ability of an insurer or broker to carry out business across the EU from a single country licence)
• Freedom of Services (FOS) access (access to the single market that an EU member state enjoys).

The world’s largest insurance market, Lloyd’s of London, underwrites €4 billion in gross written premium related to EU business.  In order to continue to serve clients in the EU after Brexit, a Brussels based office has been opened to ensure business continuity post Brexit. Many insurers have taken this lead and established offices in the EU to maintain continuity of service.

Many insurers operate from a single licence in the EU as part of a concentrated business model. However, the UK insurance market is currently arranging local licences in the EU where necessary. Insurers already domiciled in EU locations outside of the UK will continue to passport throughout the EU from that location post-Brexit.  Fraught Brexit negotiations could potentially mean political interference in passporting plans.

Many industry news stories have suggested large numbers of insurance buyers may be left with limited options but we think it’s safe to say for the majority of our clients, the insurance market is here to stay.  We are confident that provisions that we are putting into place will allow us to continue serving our client’s needs.

There are a lot of potential ramifications for the insurance industry through the Brexit process. However, the insurance industry has withstood astronomical change and upheaval over the last 20 years and has adapted to all of the challenges of the modern world. 9/11, modern terrorism threats, cyber-attacks, climate change, flooding and new technology have all changed the insurance landscape.

The Association of British Insurers (ABI https://www.abi.org.uk/ ) has set out advice for individuals and businesses who may be affected by a no-deal Brexit.

Don’t forget your Green Card!

In new guidance published, drivers are being advised of the need to contact their insurer to arrange a ‘Green Card’ if they wish to drive their vehicle in the EU.  For many years the issue of a Green Card issue has not been required because of there being no EU borders.

Customers wishing to travel to EU by car are advised to contact their insurer about a month before they travel to get one. Travelling without one may be breaking the law but in addition, you may be refused entry to EU countries at the border.

Among those affected are:

• People who drive across the Northern Ireland/Republic of Ireland border
• Anyone planning to take their vehicle to Europe
• Any freight company planning to transport goods into the European Union after 29 March

Although an agreement between the relevant European insurance authorities was made in May 2018 to waive the need for Green Cards in the event of a no-deal Brexit, this has not been confirmed by the European Commission, hence the industry is planning on the basis of Green Cards being required.

Travel Insurance

International travellers are being reassured that travel insurance will continue to work in the normal way. The European Health Insurance Card (EHIC) may not be valid going forward and without this back up, the cost of travel insurance may rise.

It is important that the EHIC is not be relied upon, even if the system continues unhindered, as reciprocal agreements vary by country.  If you are travelling in a country where only private medical treatment is available, then the EHIC does not cover this and you will have to pay.

Customers should have their travel insurance documents or their insurer’s emergency medical assistance contact number with them as they have the medical expertise, contacts and facilities to help you if you fall ill or are injured abroad.

In the event of severe travel disruption at ports or airports customers are being advised that airlines, travel agents or credit card providers would be the first port of call for financial compensation.

If these routes have been exhausted and you have travel disruption cover in place as part of your travel insurance policy, it is possible that you will be covered against some financial losses. However, this will depend on your policy so you should check with your insurer.

CMJ’s key insurer partners are all at different stages of preparation for Brexit. CMJ is closely monitoring insurer preparations for Brexit in order to minimize our client’s exposure, even in the case of a Hard Brexit.