Negotiations on multi-year insurance contracts stall due to Brexit
The uncertainty caused by Brexit is affecting negotiations for insurance contracts that span periods of more than three years.
The issue has been raised and discussed at a recent event organised by the Policy Forum for London.
“Contract continuity clearly is one of the biggest problems,” said Catherine McGuinness, chairman, policy and resources committee, City of London Corporation.
“We are aware that people are taking their own steps to transfer contracts to try to avoid the problem, but that is not going to sort everything out.
“We need to address grandfathering of contracts and ensure that insurance contracts can continue to operate after Brexit,” McGuinness explained.
Many UK-based re/insurers have already started preparing for the scenario wherein they lose access to the EU market. A number have created subsidiaries in the EU, despite the fact that the UK government’s Brexit plan currently includes a two-year transition period.
But as a participant of the event noted, some insurers may be in the process of negotiating contracts that extend to five years—and it is hard to sell a policy which may not work because it is not admitted.
The UK government appears powerless to offer much help, and if the uncertainties continue, the industry, trade bodies and regulators must collaborate to decide which steps need to be taken to manage that uncertainty, Richard Knox, director financial services (international), HM Treasury, said at the event.
This news story is a snapshot of a longer feature on Intelligent Insurer. To find out more about how Brexit is affecting the insurance sector and the looming risks, please click here.
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