Legal uncertainty for millions of customers if no deal
Leaving the EU without a deal is not acceptable if insurers are to continue to meet the needs of millions of customers and remain legally compliant Huw Evans, Director General of the ABI, will warn today. Speaking at the ABI’s flagship Brexit conference, he will set out what is needed to safeguard the interests of customers who could be hit by the lack of a Brexit deal.
Huw Evans will stress that:
“It is unacceptable not to have a Brexit deal at the point at which we leave in 2019. As the Chancellor said in the Mansion House speech, the Brexit process has to be delivered in a way that enables business to operate, and our customers not to suffer any unnecessary detriment. To meet our clients' needs as an industry and ensure full compliance with the law, the Government has to deliver an orderly withdrawal, a stable transition and a sensible and mutually beneficial future trading relationship.
“Achieving this will take time. It is more important to get it right than to pretend things are simpler than they are and set artificial deadlines. We need cross-party parliamentary co-operation to make the legislative process work. We would like to see a framework established for formal cooperation between the main parties in Westminster and between the two Houses of Parliament.”
Among the many issues affecting both business and individual customers which need to be resolved are:
Long standing customers. The treatment of contracts written pre-Brexit and still in force post-Brexit will need to be clarified. These could include pensions contracts, or business liability insurance contracts - some of them stretching decades ahead. The risk is that, as a result of leaving the Single Market, insurers lose their licence to do insurance in the customer’s jurisdiction, and therefore cannot legally fulfil the contracts.
This could mean that cross-border pension payments from the UK into the EU or the EU into the UK cannot be paid. It would also affect the ability to pay claims on many liability insurance contracts offered to businesses on a pan-EU basis. These are usually annual contracts but the claims are complicated and may take up to a decade to be completed.
The European Health Insurance Card (EHIC). Britons take 32 million holiday trips to the EU a year, and the EHIC – which is free for any citizen - reduces the costs of providing travel insurance because it allows people to receive state funded health treatment across Europe in certain circumstances.
Clarity is needed as soon as possible given insurers offering annual travel policies in April 2018 will have to prepare for the possibility of covering these treatment costs after the UK is set to leave the EU in March 2019.
It is encouraging that recent government comments recognise this issue. Whatever arrangement is reached, it will be essential that travellers understand that travel insurance remains vital.
Driving abroad. The motor insurance ‘Green Card’ guarantees that motorists have third party insurance when visiting other countries. The current system also provides victims with a route to compensation in their own country (and language) when a visiting motorist causes damage. Without a deal motorists may need to buy extra cover if they plan on driving to Europe and might also need to bring a physical Green Card with them for insurance checks at borders. This is similar to arrangements in place before the UK joined the Common Market. Those making a claim may also have to pursue claims with foreign bodies, potentially in a language which they are unfamiliar.
The ABI’s ‘Brexit – the road ahead’ conference will look at the impact and outlook that Brexit and the exit negotiations will have for the insurance and long-term savings industry. Keynote speakers include the RT Hon Nicola Sturgeon, MSP, First Minister of Scotland, and Stephen Barclay, MP, Economic Secretary to the Treasury. The conference is sold out, with over 250 representatives from the industry attending.
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Notes for Editors
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