The British and Gibraltarian insurance firms, which are yet to transfer contracts with European Economic Area (EEA) customers to the bloc, do not pose any threat to the financial stability of the European Union (EU).
This is according to the European Insurance and Occupational Pensions Authority (EIOPA).
The EIOPA was quoted by Reuters as saying that the biggest insurers in the UK and its overseas territory Gibraltar are transferring approximately 30 million contracts to ensure ‘continuity’ is not affected even if Britain comes out of the EU without a withdrawal Brexit deal in March 2019.
Brexit insurance impact
According to the EIOPA, 9.1 million EEA customers would face delays in payments on their insurance plans. These are worth a total of €7.4bn ($8.43bn) and mostly held with a few UK insurers. However, 75% of such insurance contracts have premiums of less than €100 per annum.
EIOPA told the new agency: “Only 3% of the potentially affected policyholders have a contract with life insurers.”
This data indicates that there is no threat to EU financial stability, and that the agency is cooperating with national regulators to solve the “residual” Brexit insurance impact.
Currently, Britain and the EU are discussing over an amicable separation settlement. However, this would include a business-as-usual transition deal to smoothen concerns about continuity of the insurance contracts. Furthermore, this transition deal is expected to last from March next year to the end of 2020.
Recently, the UK’s FCA executive director Nausicaa Delfas also told Reuters that it was not just the EC that could take action to alleviate a hard Brexit.
“There could be areas where national competent authorities make decisions, say about insurance contracts. They have their own systems of law and they can do that,” Delfas told the new agency.