On 12 November 2019, the Prudential Regulation Authority (PRA) published a response on its website to a statement from the Autorité de contrôle et de resolution (ACPR) in response to the EIOPA Recommendations for the insurance sector in the light of the UK withdrawal from the European Union. The responses of EU member states to the EIOPA Recommendations are available through the EIOPA website. The ACPR response was published on 8 November 2019.

ACPR has said that it does not intend to comply with EIOPA’s Recommendation 6. Recommendation 6 concerns the treatment of policyholders who change their habitual residence after purchasing an insurance policy; moving from the UK to habitual residence in an EU member state. EIOPA’s recommendation is that EU national competent authorities should consider such policies to have been concluded in the UK and that no cross-border services were provided when the contract was taken out.

In the light of French regulatory law, ACPR states that in the above situation, the risk has moved. Once the habitual residence changes, the risk has ceased to be located in the UK (or in Gibraltar) and has become situated in France. Accordingly, the risk must be covered by a firm authorised to conduct business in France in accordance with Article L 310-2 of the Insurance Code.

Under French law (Ordinance No. 2019-75 of 6 February 2019), UK firms operating in France prior to Brexit are able to run-off existing contracts but cannot renew agreements. The Ordinance also applies to policies written in the UK prior to Brexit under passporting rights. After Brexit, firms must be authorised to operate in France. Both UK and Gibraltarian firms with policyholders now resident in France (or likely to be resident in France before Brexit) must submit a notification of an intention to passport before the UK leaves the EU.

The PRA’s response states that firms should seek legal advice and consider any potential risks arising from the approach taken by the ACPR. Firms should consider now whether they may need to submit a notification of an intention to passport into France prior to Brexit to ensure that they can rely on the run-off provisions under French law.

View: PRA publishes statement on French regulator’s response to EIOPA Brexit Recommendations