The Executive Director of Insurance Supervision at the Prudential Regulation Authority (PRA), has written to insurance firms to seek confirmation that they have contacted relevant EU authorities to ensure that Brexit contingency plans remain satisfactory. With the UK leaving the implementation period at the end of the year, the PRA wants firms to ensure that they have sought legal advice about next steps.
A number of firms might have made the PRA aware that they would rely on run-off regimes or transfer liabilities to an EU-authorised insurer before the implementation period ends (in which EU law still largely applies).
The PRA wrote to insurance firms in November 2019 to highlight the measures taken by EU authorities in response to EIOPA’s recommendations in the event of a no-deal scenario. Notably, a number of EU countries have yet to come up with measures for any transitional regime.
The PRA letter emphasises that insurance firms intending to rely on EU run-off regimes should undertake a thorough analysis of their expected run-off profile, and should discuss their approach with the relevant EU authorities. The PRA is unable to guarantee that any Part VII transfer will receive a court sanction within firms’ intended timeframes. As a result, firms should put into place robust contingency plans that satisfy EU regulator’s requirements. These contingency plans should reflect any legal advice received.
The letter requests that insurance firms confirm to their PRA supervisor by Thursday 30 April that they have engaged with all relevant EU authorities.