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UK insurers back pre-Brexit focus on contract law

The Association of British Insurers (ABI) supports moves by the prudential regulator to put cross-border contract issues high up the agenda in Brexit negotiations.

The ABI says there are concerns about how millions of insurance and pension contracts written pre-Brexit will be fulfilled after the UK leaves the European Union.

“As the deadline for Brexit looms, many insurers’ biggest fear is they will be left with a stark choice between breaking their promise to customers or risk breaking the law if the issue of how to fulfil existing contracts cross-border is not resolved,” ABI Director-General Huw Evans said.

“Agreeing terms to allow insurers to service contracts after March 2019 needs to be part of the exit negotiations between the UK and EU.”

Prudential Regulation Authority (PRA) CEO Sam Woods says in a letter to the UK Parliament’s Treasury Select Committee that there is particular concern over contract arrangements.

“Some form of implementation period is desirable, to give UK and EU businesses more time to make the necessary changes to adjust to the UK’s new relationship with the EU in an orderly way,” he says.

Areas of concern include business insurance contracts, such as liability cover, sold from the UK to the EU, and policies sold from the EU into the UK.

“This is an urgent issue and we are pleased it is high on Sam Woods’ agenda,” Mr Evans said.

“We will continue to work closely with the Government, our membership and the PRA in an effort to ensure a solution is in place in time.”