The European Insurance and Pension Association has called for all UK insurance firms “to finalise preparations and implement suitable and realistic contingency plans in advance of the end of the UK transition period.”
The UK transition period according to the Brexit withdrawal agreement will end on 31 December 2020, following this date, all EU primary and secondary law will no longer apply to the United Kingdom, including the Solvency II Directive as well as the Directive on Insurance Distribution.
EIOPA said that “the insurance sector needs to be prepared for the consequences of UK and Gibraltar insurance undertakings becoming third-country undertakings and no longer benefiting from the Solvency II authorisation to provide services in the EU”.
It comes as UK insurers are currently pushing for government officials to change insurance rules once Britain has left the EU.
According to the Financial Times, UK life insurers would like to see quick changes to the risk margin, a part of Solvency II Directive that forces insurers to retain more capital against long-term business, such as annuities.
Firms also say that the risk margin makes it “more difficult” to take over corporate pension schemes via buyouts and make investments in larger assets such as infrastructure.
Tracy Blackwell, chief executive of Pension Insurance Corporation told FT: “The risk margin has to change, it is very volatile and it makes capital planning quite tricky.
“We are expecting something to happen early next year, the risk margin should be at the top of the agenda in the government review.”