Brexit and the insurance sector – inform customers about Brexit’s impact on insurance contracts

The European Insurance and Occupational Pensions Authority (“EIOPA”) provided an opinion on informing customers about the impact of the withdrawal of the United Kingdom from the European Union (“Opinion”). The Opinion is addressed to national competent authorities and aims at ensuring proper monitoring of insurance undertakings and insurance intermediaries when providing information to customers and beneficiaries over Brexit and its impact on their insurance contracts. To ensure customer protection, EIOPA considers that customers and beneficiaries should be informed by their insurance intermediaries or insurance undertakings of the implications of Brexit, for both existing and new contracts.

• Insurance contracts – All cross-border insurance contracts between the UK and the European Union are affected. This includes contracts that terminate before the Brexit date, but for which open claims exist or might be reported thereafter;
• Information to customers – Insurance undertakings and insurance intermediaries should in good time provide their customers with clear and non-misleading information on the Brexit measures taken or planned and their impact on their insurance contracts. Even if no measures are taken, customers should be informed of the reason for not taking measures. Customers should be made aware of possible impacts, such as:
  • change of the contractual counterparty following a transfer of insurance contracts to another insurance undertaking;
  • changes to the claims management procedure or to other customer services;
  • tax implications of insurance contracts (e.g. insurance premium tax following the relocation of an entity to another jurisdiction); and
  • change of the law applicable to the insurance contract.
• Information to distributors – Insurance undertakings should also provide this information to their distribution channels to enable them to inform their customers accordingly.

Compliance with this information obligation by the insurance undertakings and the insurance intermediaries will be monitored by EIOPA and the national authorities.