Brexit: looking beyond the deadline

The uncertainty over Brexit will continue until the current proposed leaving date of 31 October and potentially beyond. That deadline could mark the UK's departure from the EU with no deal in place or a further extension to the departure date.

Whatever the outcome, however, the decisions being made will mark a fundamental change to the UK and its insurance sector.

Intensive negotiations

Once the UK has left the EU the serious negotiations about future trading relationships with EU members and the rest of the world will begin. Such negotiations are highly complex and will likely take many years to conclude, requiring careful navigation of the EU's decision-making processes.

The Withdrawal Agreement is being negotiated under Article 50 of the EU Treaty. This only requires the EU to pass it under its qualified majority voting regime (meaning no one country has a veto) and secure the European Parliament's support. This can only happen after it is passed by the UK Parliament, which may never happen - the 'No Deal' scenario.

Once the UK leaves, then future trading relationships will be negotiated under Articles 207, 217 and 218, which require the unanimous agreement of all member states, their national parliaments and, where applicable, their regional parliaments. This could prove a highly challenging and lengthy process.

In terms of the impact on the insurance sector, a potential No Deal scenario could affect the industry in many ways. For example, it is likely that most trade with the EU would be conducted on World Trade Organisation terms. These have considerable gaps relating to financial services, so efforts will be required to ensure some form of transitional period of mutual recognition to remove potential stumbling blocks.

Ongoing uncertainty regarding the potential impact of Brexit on the financial services sector has left firms little option but to prepare for an abrupt No Deal exit, while hoping for a more controlled departure.

The insurance impact

For insurers and brokers, this has meant establishing which clients and contracts need to be serviced from within the EU and where to base the operations that service those businesses. Many have already made important choices and others will need to. Sites including Dublin, Luxembourg and Paris are proving primary re-domicile locations for UK financial services firms.

The future of Gibraltar will also be on the post-Brexit negotiating table. The EU expects Spain to conclude a bilateral agreement with the UK over Gibraltar before any EU-wide trade deals can be signed, which will not be easy. With the amount of UK insurance - especially motor - now written in Gibraltar, this will need careful monitoring.

As well as major international insurance business, several personal lines insurances could be adversely affected by Brexit, especially travel with around 60% of UK travel insurance cover passported in from the EU. UK drivers travelling to the continent may require a Green Card to show their insurance covers them for driving in the EU, while the European Health Insurance Card (E111) could go, meaning British travellers to Europe could need extended health insurance cover.

The battle against fraud could also become an issue as data sharing for criminal investigations is not guaranteed to continue after Brexit.

Prepared to depart

During this period of significant uncertainty, Crawford will deliver stability and continuity of service whatever the outcome. As a global business with offices in the UK and throughout Europe, we are well positioned to carry on business as usual and to assist our clients in the most effective way.

Our specialists are highly adept at dealing with rapidly evolving situations, and we view Brexit as exactly that. Whatever the scale or complexity of the service required, our clients can be assured of a professional approach, delivered by highly qualified personnel with extensive experience, no matter what the Brexit outcome.

Crawford's departure preparations have been extensive so our clients can be confident that we will be fully equipped to restore lives, business and communities at all times and in all circumstances.

To find out more, contact [e-mail] of our Global Compliance Office.