BREXIT – Urgent measures for the operation of UK insurance undertakings and distributors in case of hard BREXIT - Law Decree n. 22 dated 25 March 2019
On 25 March 2019 the Law Decree no. 22 (the “Decree”) on urgent measures to guarantee the continuity of the markets and of the intermediaries in case of no-deal Brexit was published on the Italian Official Gazette.
The purpose of the Decree is to preserve the stability of the Italian economic, banking, financial and insurance sectors and to ensure the market integrity and the protection of both investors and customers in case of Hard Brexit, by ruling on the activity of the market operators for the duration of 18 months (the “Interim Period”) starting from the date of withdrawal of the UK from the EU (the “Withdrawal Date”) that takes place either on 12 April 2019 in the event that the Withdrawal Agreement is not approved by the House of Commons by 29 March 2019, or on 22 May 2019 in the event that the Withdrawal Agreement is approved by the House of Commons by 29 March 2019 at the latest.
The Decree enters into force starting from 26 March 2019 and in order to have final effects, it must be converted into law within 60 days from the publication date in the Italian Official Gazette.
1. UK insurance undertakings: cancellation from the register and effects on the contracts
Effective from the Withdrawal Date, UK insurance undertakings carrying out insurance activity in Italy under the Freedom of Services (“FoS”) or the Freedom of Establishment (“FoE”) regime will be cancelled from the section of the Italian register where EU insurance undertakings authorized to operate in Italy are enrolled.
The so-cancelled UK insurance undertakings are requested to:
- continue in the Interim Period to manage the company and insurance undertakings existing at the Withdrawal Date;
- neither execute new insurance policy nor renew the existing ones, even in case the insurance policy provides for the tacit renewal clause; and
- communicate to the policyholders and the insureds the regime applicable to their case due to the withdrawal also by publishing it on their web-site within 15 days from the Withdrawal Date.
IVASS will make available to the pubic the temporary continuation of the activity of the relevant undertakings.
Clients are entitled to either terminate any insurance contract having a duration longer than one year by giving written notice to the insurance undertakings or to avail themselves of any other termination clauses provided for under the contract. The tacit renewal clause will cease to be effective. Clients’ withdrawal shall be effective from the expiry date of the first year following to the Withdrawal Date.
Within 90 days from the entry into force of the Decree, cancelled UK insurance undertakings must submit to IVASS a contingency plan contained the measures to be taken in order to allow them to regularly manage the contracts and obligations existing on the Withdrawal Date, including payments of claims.
Companies that fail to ensure the complete implementation of the plan by the end of the Interim Period, must promptly inform IVASS thereof by submitting an extension request that will be subject to IVASS’ evaluation.
2. UK insurance and reinsurance distributors: cancellation from the register and effects on existing contracts
Effective from the Withdrawal Date, UK insurance and reinsurance distributors carrying out their activity in Italy under the FoS or FoE regime, shall terminate their activity and shall be cancelled from the Register of the intermediaries held by IVASS.
The so-cancelled distributors are requested to:
- carry out the activities necessary to terminate the existing contracts as soon as possible and in any case within 6 months from the Withdrawal Date;
- inform the clients on the regime applicable to them also by disclosing it on their web-site within 15 days from the Withdrawal Date;
- neither initiate new distribution activities nor renew, even tacitly, the existing contracts.
IVASS shall make available to the public the temporary continuation of the activity.