Brexit: Implications for General Insurance [UPDATED]

1. The UK and the EU agree a permanent trade deal
2. There is an extension to the transition period
3. The UK leaves the EU without a deal, and there is no further transition period.

Although there will be many professionals that deal exclusively with UK clients who will not experience a strong direct impact from Brexit, those professionals that operate on a cross-border basis between the UK, and the EU will experience a major impact on their business under all the possible scenarios. Brexit will impact the way in which their firm operates, and it will impact the way in which their professional qualifications are recognised.

In the event of a ‘no deal’, firms that are authorised in the UK will no longer be able to passport services into the EU. They will have to be authorised in the EU in order to continue trading in the EU. In addition, even if there is a deal, it is highly unlikely that there will be a mechanism under which insurance-broking firms can operate cross-border from the UK to the EU. This is because the UK government has proposed that some cross-border activity in financial services can continue under the EU’s structure for ‘third country equivalence’, which already exists for banks and insurance companies. However, no such third-country system of equivalence exists in current EU legislation for insurance brokers. 

For individuals, cross border recognition of professional qualifications is currently governed by the Recognition of Qualifications Directive. This will no longer apply in a no deal scenario. As a result, each individual country in the EU will have to decide which qualifications to recognise. The UK has proposed mutual recognition of professional qualifications in its draft proposal for a deal with the EU, and the CII supports this approach. 

For example, the Central Bank of Ireland currently recognises some CII qualifications (see https://www.centralbank.ie/regulation/how-we-regulate/authorisation/minimum-competency/qualifications). We are working with regulators in the EU to explain the benefits of UK qualifications, and, where possible, secure recognition for CII qualifications; however, this process is likely to be lengthy and the current situation is not likely to change before the end of December 2020.