XL Catlin introduces Brexit continuity clause
XL Catlin’s London-based insurance operations have introduced a contract continuity clause which addresses the risk that contracts written prior to Brexit may become impermissible assuming passporting rights are lost as a consequence of the UK leaving the EU.
The clause is intended to be included in insurance policies written by Catlin Insurance Company (UK), (CICLUK) – a PRA and FCA regulated insurance company – and XL Catlin’s syndicate 2003 at Lloyd’s. These two entities will remain in the UK after XL Insurance Company SE (XLICSE) – the main insurance company platform for XL Group within Europe and Asia – moves to Dublin, Ireland, subject to regulatory approvals. The move means that XLICSE’s policies do not need to rely on the clause.
The clause mirrors standard London Market continuity clauses, with some key differences. The clause makes XLICSE an additional party to the policy from inception as a contingent insurer with the aim of providing continuity of cover for clients. If post Brexit a policy’s performance becomes impermissible in whole or in part and cannot be amended to enable CICLUK or the Syndicate 2003 to perform it permissibly, XLICSE (assuming that XLICSE has moved to Dublin within the time period expected) will automatically and seamlessly be contractually obliged to perform it or any part of it, assuming it can do so permissibly.
If XLICSE cannot perform the policy, only then is it automatically cancelled with a pro-rata return of premium (subject to no claims having been notified).
“Our innovative clause offers significant advantage by minimising the risk that policies will be cancelled, by making XLICSE a contingent party to the policy,” said Paul Greensmith, UK country leader & director of London Market wholesale, XL Catlin. “Effectively, XLICSE will act as a back-up. A political solution may yet be forthcoming that ensures polices can be performed post Brexit, but in the absence of one we believe this clause gives our clients and brokers the certainty they expect and deserve from their insurance partner.”
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