Chair of the Treasury Committee, Nicky Morgan MP, has written to Chancellor Philip Hammond to raise the issue of how cross-border pensions and insurance contracts will be managed after Brexit.
This is in line with concerns previously raised by the Association of British Insurers that unless negotiations over how to handle long-standing contracts are part of the first phase of Brexit negotiations, there may not be time to resolve them effectively.
Director General of the ABI, Huw Evans, said:
“We are pleased that Nicky Morgan, as Chair of the TSC, has raised this important issue with the Chancellor. This is a shared challenge for the EU and UK and a vital issue for millions of our customers. We have been urging all sides to address it as a matter of urgency and agree on a reciprocal solution. Without a resolution insurers will face a choice between breaking their promise to customers or risk breaking the law. It must not come to this.”
Background to the issue
The problem revolves around millions of insurance and pension contracts written pre-Brexit that will still be in force post-Brexit and impacts a wide range of people and businesses:
- Companies in the UK paying pensions to people living in the EU, including expats.
- Anyone resident in the UK receiving a pension from the EU.
- Business insurance contracts, such as liability insurance sold from the UK to a company in the EU
- Business insurance contracts sold from the EU into the UK.
The risk has emerged because as a result of leaving the Single Market, some insurers will lose their automatic licence to insure in the customer’s jurisdiction. They therefore may not be legally able to pay what they owe without a replacement agreement.
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Notes for Editors
The Treasury Committee has also shared the ABI’s briefing explaining the background to this issue which can be seen here.
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