EIOPA has reminded both insurers and intermediaries of their duties to inform policyholders of the effect of the UK’s withdrawal from the EU on their insurance contracts. In this guidance, EIOPA has highlighted that insurers and intermediaries should make their customers aware of the potential impacts on both existing contracts and new contracts which have been concluded prior to the exit date.
Existing customers or beneficiaries should be provided with clear and non-misleading information on any contingency measures taken or planned and on the impact of these measures on their insurance contracts. In the case where no measures have been taken, the reason for not taking measures should be communicated to the policyholders. Where a beneficiary is the claimant, the above information should be communicated at the time that the beneficiary submits a claim.
EIOPA has noted that the above disclosure and communication requirements includes cases where contracts would be terminated by the withdrawal date, but for which open claims exist or might be reported thereafter.
In terms of new or renewed contracts prior to the exit date, the potential policyholder should be provided with this information to enable them to make informed decisions. The obligation to provide this information extends to insurance intermediaries as well.
Potential impacts might include:
- change of the contractual counterparty,
- continuity of services and validity of insurance contracts,
- change or loss of protection provided by any existing national compensation scheme,
- tax implications of insurance contracts including e.g. insurance premium tax following the relocation of an entity to another jurisdiction,
- changes to the claims management procedure or to other customer services (e.g. following a change of domicile of an insurance undertaking),
- how customers can raise questions or inquiries,
- jurisdiction and contact details of the regulator,
- change of the law applicable to the insurance contract.
The FCA has also clarified its expectations on regulated firms to consider the potential impact of a no-deal Brexit on customers’ policies. Brokers should bear in mind that different categories of customers might be affected by Brexit in different ways. The FCA expects brokers to communicate clearly and proactively to customers any changes to their policies relating to Brexit or if there might be any provisions which would invalidate or limit a claim as a result of Brexit.