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Insurance

Checklist

Passporting rights

The passporting system allows (i) UK insurers, reinsurers and insurance intermediaries to issue insurance policies and to serve their clients in the EU/EEA, and (ii) EU insurers, reinsurers and intermediaries to conduct insurance business in the UK, across borders (freedom of services) and through local branches (freedom of establishment).

Post-Brexit, both inward and outward passporting rights providing authorisation to carry out insurance business across the EU could be terminated, for both new and existing businesses.

Firms currently relying on passporting to or from the UK will need an alternative option and should obtain additional licences to carry on business in the EU/EEA states, or they should consider establishing new licensed companies instead. 

Establishing a local presence

CMS Belgium’s insurance lawyers are helping a number of international (re-)insurers and insurance intermediaries to restructure or move their operations to carry on their business in the UK and across the EEA post-Brexit.

Regulatory alignment

Immediately following Brexit, British and Belgian regulations on insurance will remain largely equivalent. British and Belgian laws transposing EU directives (e.g. Insurance Distribution Directive) are set in national law and will not be changed by Brexit. However, Brexit will allow British lawmakers to deviate from this alignment.

Regulatory requirements

A licence request should be filed with the Belgian local regulator (FSMA/NBB) for UK insurance intermediaries or insurers to carry on insurance business in Belgium post-Brexit. An alternative would be a passport licence granted in another EEA country to carry out activities in Belgium.

Substance requirements

If a new Belgian entity is established, the Belgian regulator will require this entity to have actual substance in Belgium, proportionate to the level of business. This could be a gradual process. 

Portfolio transfers

For UK insurers which have underwritten European insurance policies, a run-off or a transfer of portfolios may need to be put in place. Conversely, EEA insurers which have underwritten UK insurance policies may need to run off or transfer those portfolios as well.

Policies

The impact of Brexit on existing policyholders, services, products and policy wording must be reviewed. If needed, policy wording and documentation must be updated (e.g. scope of cover, duration of policy, changes in risk resulting from Brexit, and governing law and jurisdiction).

Contracts

Post-Brexit, all contracts should be reviewed to determine whether certain provisions in key commercial contracts should be amended, including provisions on distribution, IP licensing and IT provisions, financing agreements and standard terms and conditions.

Data protection

If the GDPR is not retained unchanged in UK law, then the impact of the GDPR on data transfer and on existing and future contractual arrangements must be reviewed.

Employment

Depending on how the passporting issue is dealt with, there must be a plan for the possible relocation of employees to and from the UK. If relevant, TUPE regulations must be considered.

Tax observations

No specific tax other than insurance premium tax (IPT) applies to the sale of policies in Belgium. Certain types of policy are exempted.

Insurance mediation services (and related services) are exempt from VAT.

Any income from the sale of policies is nevertheless subject to (corporate) income tax.

Tariffs

Tariffs on consumer products, e.g. auto parts, are likely to increase the costs of insurance claims and premiums.

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