I propose to take Questions Nos. 72 and 74 together.
As the Deputy will be aware, upon withdrawal from the EU and in the absence of a political agreement between the EU and the UK, UK (including Gibraltar) insurance undertakings and insurance distributors will lose their right to conduct business by way of Freedom of Establishment (FOE) and Freedom of Services (FOS) under the EU regulatory framework.
According to the European Insurance and Occupational Pensions Authority’s (EIOPA) Opinion of 28 June 2018, insurance contracts concluded before the Withdrawal date by UK undertakings by way of FOE or FOS are in principle valid after that date. What has been in doubt however is the ability of insurance undertakings and insurance distributors (i.e. brokers) to continue performing certain obligations and activities and ensure service continuity with regard to such contracts, e.g. pay out claims.
It is understood that a significant majority of UK/Gibraltar insurance undertakings have prepared appropriate Brexit contingency plans which are expected to be implemented in advance of Brexit. However, there is a legitimate concern, that a small number of such undertakings as well as a number of insurance distributors will either not have completed such contingency plans by the end of March 2019, or have made a decision not to implement them in the first place. Such a scenario as you will appreciate gives rise to a risk in respect of their ability to continue servicing the insurance policies they have sold.
Consequently, the focus of my Department and the Central Bank has been to find a solution to address this issue. The proposed solution, which is reflected in the General Scheme of the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill, provides for a temporary run-off regime which, subject to a number of conditions, will enable impacted UK/Gibraltar insurance undertakings or insurance distributors to continue to provide services to their Irish customers for a period of 3 years after the date of the withdrawal of the UK from the EU. Both my Department and the Central Bank believe that this proposal is compatible and in line with the Solvency II Directive which sets out that the main objective of supervision is to ensure ‘adequate protection of policyholders and beneficiaries’.
The Deputy should also be aware that such insurance undertakings and insurance distributors will no longer be able to write new business in Ireland unless and until they obtain the relevant authorisation under the EU insurance supervisory regime.
The General Scheme of the legislation was published by the Tánaiste and Minister for Foreign Affairs and Trade on 24 January 2019 and can be viewed on his Department’s website at:
https://www.dfa.ie/media/dfa/eu/brexit/brexitnegotations/General-Scheme-of-Miscellaneous-Provisions.pdf .
My officials are currently working with the Central Bank of Ireland and the Office of the Parliamentary Counsel to develop Part 8 of that Scheme into the legislative provisions necessary to protect Irish policyholders from insurance contract continuity issues in the event of a hard Brexit.
