Where is the customer located?
Intermediaries and insurers need to check whether their regulatory permissions allow them to place (and accept) any given risk. It might be the case that following Brexit a UK intermediary is no longer permitted to perform distribution activities in respect of customers located in an EEA territory.
The Solvency II directive defines the location of a customer insofar as it applies to an EEA insurer wishing to exercise its freedom to provide services and rights of establishment in relation to other EEA territories. Neither the Solvency II directive, nor the Insurance Distribution directive, establish uniform definitions relating to market access by third country insurers and intermediaries to individual EEA territories.
Whether, in respect of an EEA territory, a third country insurer is performing insurance business or whether a third country intermediary is performing insurance distribution activity is therefore a matter of local laws and regulations of that EEA territory.
The UK, for instance, applies a test of where the regulated activities are carried on and not one of where the client is based or where the risk is located. It is therefore important that intermediaries and insurers clarify what is required by local law and the expectations of relevant national regulators.
Individual insurers are likely to have developed their own bespoke definitions and operating controls and processes around underwriting and accepting risks with customers located in other jurisdictions in order to avoid writing business which falls outside their regulatory permissions. This might result in differences between different insurers. It is therefore important that a broker discusses with their capacity provider what the scope of their regulatory permissions might be.