Q&As

Brexit—what are the passporting and equivalence implications for the UK insurance sector?

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Produced in partnership with Clare Swirski, corporate insurance partner and Amera Dooley, PSL of Clifford Chance
Published on LexisPSL on 22/09/2016

The following Financial Services Q&A Produced in partnership with Clare Swirski, corporate insurance partner and Amera Dooley, PSL of Clifford Chance provides comprehensive and up to date legal information covering:

  • Brexit—what are the passporting and equivalence implications for the UK insurance sector?
  • What are the main aspects of passporting under Solvency II?
  • What are the passporting implications of Brexit?
  • Will a finding of equivalence for UK regulation assist if the UK becomes a third country?
  • What options are open to insurers if their UK passport becomes ineffective?
  • Could the UK implement fast-track authorisations?
  • What are the effects if the UK becomes a 'third country'?
  • How are equivalence decisions obtained?
  • Could the equivalence framework be extended?
  • What forward planning should insurers be undertaking?
  • More...

This Q&A considers the impact of Brexit on passporting in the insurance sector, what options are available to insurers to continue to access the European Economic Areas (EEA) and the factors for insurers to take into account in their contingency planning. This Q&A is produced in partnership with Clare Swirski at Clifford Chance.

What are the main aspects of passporting under Solvency II?

The activity of providing insurance on a cross-border basis within the EEA is described as 'passporting' and, under Solvency II, a (re)insurance undertaking authorised in one Member State can provide (re)insurance into another Member State either by:

  1. providing services only (ie with no permanent physical presence in the EEA state)—a right provided by Article 56 TEFU

  2. setting up an establishment there, usually described as a 'branch'—a right provided under Article 49 TEFU

A (re)insurance undertaking that has 'passported' by one of the above means, will be supervised in respect of prudential matters by the Member State in which it has its head office and is authorised. This is its 'home state' and the Member State in which or in respect of which the undertaking exercises its passport is referred to as the 'host state'.

Under Solvency II, a passport is available to insurers carrying on direct insurance business only, or a combination of direct and reinsurance business. To take advantage of Solvency II passporting rights,

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