Post Brexit: Managing our clients’ EU risk and insurance requirements
On 1 January 2021 the UK / EU Brexit transition period ended and over the first few weeks of this year, industry sectors have studied the details of the UK / EU deal to better understand the implications on their business. The Insurance sector is no different in that respect and with the focus of the Brexit deal having centred largely on trade and cooperation, remarkably little discussion took place in relation to UK Financial Services. A memorandum of understanding is currently being prepared by Government in consultation with the sector, with discussions set to open in April. With that in mind, we felt it appropriate to clarify the actions that were taken by Griffiths & Armour many months ago and to explain the measures we have taken to protect our clients’ domestic and international interests.
What has changed following the end of the Brexit Transition period?
Historically, many financial services firms (including insurers and brokers) have relied upon ‘passporting’ rights, which allow firms regulated in one EU member state to undertake certain regulated activities throughout the EU. Following the end of the transition period, UK firms are no longer entitled to operate on that basis. This has implications for UK insurers and insurance brokers with EU clients that have traditionally looked to the UK insurance market to provide solutions.
Has this come as a surprise to financial services providers?
No, none of this should have come as any great surprise. The Trade & Cooperation Agreement was never intended to cover financial services. It was hoped that provisions would be put in place to overcome the removal of passporting; however, it has been increasingly apparent that it was important for insurers and brokers to be putting at least contingency plans in place.
What actions were taken by Griffiths & Armour?
As an insurance broker managing our clients’ insurance and risk management requirements in the UK, EU and globally, we took steps to address the potential loss of passporting rights in the wake of Brexit. This action was taken to ensure we could continue to support clients in both UK and EU jurisdictions. This process began following the Brexit vote in 2016, and being aware of the broad range of potential implications, we established Griffiths & Armour Europe, a designated activity company based in Dublin and regulated by the Central Bank of Ireland. Over the past 12 months, we have been managing the transfer of our EU clients to Griffiths & Armour Europe DAC and establishing the basis for split arrangements where firms have operations in both the EU and the UK.
Why was Dublin seen as the right location?
Having worked with clients and industry bodies in Ireland for several decades, we have a long and established reputation, which builds upon the very strong business and personal connections that exist between the two countries. As a result, we believed Dublin to be a natural home from which to serve the interests of clients across the EU.
What does the future look like?
The framework we have established leaves us well placed to deal with risks across jurisdictions but there will be challenges. To some extent, insurers are still finding their way, and much will become clearer when the wider financial services agreements are established at national levels.
In the short-term, we have been working with our EU clients to ensure the structure of each individual client’s insurance arrangements will respond in a practical, effective and compliant way within the territories that they choose to operate.
In the medium-term, the broader discussions regarding the future relationship between the UK and EU are likely to continue to evolve, and as they do, we too will continue to adapt and keep our clients informed with timely updates.
In the meantime, it’s very much business as usual, the actions we have taken reaffirm our commitment to offer proactive support to all Griffiths & Armour clients and we look forward to maintaining and building upon our valued client relationships across the UK, EU and beyond.
If you have any questions regarding this article and your insurance position in relation to EU activities, please get in touch with your usual Griffiths & Armour contact who will be happy to assist.