As 29 March 2019 approaches, Matheson's Insurance Team understands that time is at a premium for all our clients. With this in mind, we have prepared a case study highlighting what it means for our Irish- and UK-based insurance clients, summarising:
what happens in the event that the Withdrawal Agreement is signed; what happens in the event of a no-deal Brexit; and what firms must / can do next? Irish authorised insurer (Irish Firm) passporting into the UK under the EU Passporting Regime
If the Withdrawal Agreement is signed
If the Withdrawal Agreement is signed, the status quo is maintained until end December 2020. EU law remains applicable in the UK and the Irish Firm can continue to passport into the UK in the normal manner.
During this time, the Irish Firm, based on the decision which will be reached between the EU and UK regarding equivalence (1) etc, can decide on the best way forward for its business.
In the event of a no-deal Brexit, where the UK withdraws from the EU, the UK becomes a 'third-country'.
The Irish Firm will no longer be able to avail of the EU Passporting Regime. With this in mind, the UK has implemented a Temporary Permissions Regime (TPR). Pursuant to the TPR, the Irish Firm will be deemed to have permission under Part 4A of the Financial Services and Markets Act 2000, on a temporary basis. The scope of the permission will mirror the Irish Firm's current passporting permission in place pre-Brexit.
It is anticipated that the regime will apply for a maximum of three years.
During this time, the Irish Firm, based on the decision which will be reached between the EU and UK regarding equivalence etc., can decide on the best way forward for its business.
So what next?
The TPR does not apply automatically. If the Irish Firm wishes to avail of the TPR it must notify the FCA using its Connect system. This notification must be filed before end of day 28 March 2019.
If the Irish Firm fails to apply for the TPR it will automatically be subject to the Financial Service Contracts Regime (FSCR). The FSCR was introduced by the UK Government to ensure existing contractual obligations not covered by the TPR can continue to be met. The FSCR will permit the Irish Firm to service its UK contracts entered into pre-Brexit so that it can wind down / run-off this business in an orderly fashion.
Crucially - no new business can be written under the FSCR.
The FSCR will apply for a period of 15 years for insurance...