German Regulator Wants Brexit Plans From UK Insurers

German regulator BaFin has written to UK-based insurers doing business in Germany demanding details of how they plan to deal with Brexit' " What emergency plans you have developed to take into account all conceivable exit scenarios."

BaFin is not concerned about insurers moving to Germany but about UK ones that insure German businesses and people, anywhere within Europe.

The concern is that insurers will not be able to fulfil their promises to customers after the UK leaves the EU.

London based insurers use the EU's passporting rights to sell policies across Europe and if these passporting rights disappear, insurers may not be legally allowed to pay out on those policies. Insurance companies may face a choice of breaking the contract or breaking the law on the settlement of claims and all other obligations deriving from a policy.

Due to the imminent Brexit process, BaFin is paying particular attention to the urgent questions and issues of companies located in the United Kingdom with a view to minimising operational risks and offering a reliable supervisory framework in Germany.

Companies can make use of extensive outsourcing possibilities that fulfil BaFin's supervisory requirements. However, BaFin does not accept mere letterbox arrangements.

By making demands on UK insurers this early, they may have shot themselves in the foot and annoy companies that may have considered setting up in Germany.

BREXIT & Insurance News

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