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Out-Law News | 22 Feb 2019 | 4:35 pm | 2 min. read
The Irish government has made provision for the temporary run-off regime as part of the Withdrawal of the United Kingdom from the European Union Bill ('Brexit Omnibus Bill'), which has just been published ahead of its introduction to the Dail next week. It has proposed that the regime would last for three years from the date of the UK's withdrawal from EU without an agreed withdrawal deal in place.
In a 'no deal' Brexit scenario, the UK will become a 'third country' on 30 March 2019. UK insurers and distributors will therefore lose the right to conduct business freely in Ireland by virtue of EU law, on both a freedom of establishment (branch) basis and on a freedom to provide services basis.
Once passed, the Omnibus Bill would amend the European Union (Insurance and Reinsurance) Regulations 2015, which give effect to the EU's Solvency II Directive in Ireland; and the European Union (Insurance Distribution) Regulations 2018, which give effect to the EU's Insurance Distribution Directive in Ireland. The amendments would create temporary domestic runoff regimes for certain insurance undertakings and certain insurance intermediaries respectively, giving firms which meet certain conditions deemed authorisation for three years.
In order to benefit from the proposed regime, a UK insurer operating in Ireland on either the branch or the freedom to provide services basis must have ceased to conduct new insurance contracts in Ireland, and must be exclusively administering their existing Irish insurance portfolio in order to terminate their activities in Ireland.
Insurance law expert Niall Campbell of Pinsent Masons, the law firm behind Out-Law.com, said that the proposed run-off regime should provide at least some assistance to UK insurers which meet the relevant conditions, provided that they were able to wind up their Irish business within the three-year period specified by the legislation.
"If an insurance contract underwritten by a UK insurer took longer than three years to runoff, the understanding is that any administration of that contract which is carried on outside of the proposed time period would not benefit from the regime," he said.
"Having regard to the conditions referred to above, the understanding is that the proposed temporary run-off regime would not be of assistance for new and renewal Irish insurance business after Brexit," he said.
UK insurers wishing to continue to conduct new Irish insurance business after Brexit would instead be required to apply to the Central Bank of Ireland for an Irish branch authorisation under part 12 of the 2015 regulations, which deals with authorisation of an Irish branch of an insurance undertaking established outside the European Union, Campbell said.
Speaking as the Omnibus Bill was published, deputy prime minister Simon Coveney said that the legislation was "the product of a root and branch trawl of our laws to determine what changes will be needed if the UK becomes a third country overnight".
The bill contains discrete sections on health, investment, electricity regulation, student support, taxation, harbours, cross-border bus services, social security, employment rights, immigration and extradition, as well as insurance.
Fintech meet up