A.M. BestTV: Insurers Move to Mitigate Possible Loss of Passporting Rights, Says A.M. Best Senior Director

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FOR IMMEDIATE RELEASE

OLDWICK - NOVEMBER 28, 2018 01:53 PM (EST)
In this episode of ^A.M.BestTV, Catherine Thomas, senior director of analytics, A.M. Best, said insurers are preparing for the possibility that the United Kingdom will leave the European Union (EU) without securing agreements to protect cross-border insurance relationships. Click on http://www.ambest.com/v.asp?v=brexit1118 to view the entire program.

Thomas explained the significance of passporting in the United Kingdom.

“Passporting allows EU insurers to write cross-border business throughout the European Economic Area (EEA),” said Thomas. “When the United Kingdom withdraws from the EU, and at the end of any transition period, it is expected that passporting rights, which currently exist between the United Kingdom and the EEA will cease.”

Highlighting the impact of the potential loss of passporting, she said, “That will mean that U.K. insurers will no longer be able to issue insurance contracts in the EEA. It is also possible that in the absence of a political solution, they will no longer be able to service existing EEA business through the settlement of payment of claims.”

While the possibility of losing passporting presents a challenge, Thomas said insurers are putting together contingency plans.

“The majority of insurers that are affected by Brexit and rated by A.M. Best are looking to transfer their EEA portfolios from a U.K. insurer into an affiliated EEA insurer under Part VII of the Financial Services and Markets Act.”

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