The French government has issued a set of emergency measures for insurance contracts that will take effect if the UK withdraws from the European Union (EU) without an agreement concluded in accordance with article 50.
The rules relate to contracts entered into before Brexit on the basis of the European Economic Area (EEA) insurance passport, and will remain in force for 12 months after the UK leaves.
If validated by Parliament, they will legally require that “insurance contracts covering French risks via the freedom to provide services or the freedom of establishment may not be amended if such amendment entails the collection of additional premiums.”
France would also prohibit the renewal of all insurance contracts, including automatic ones, but would not consider payment of claims to constitute a breach.
This clarification will enable British insurers to pay claims post-Brexit, as well as allowing them to run-off existing portfolios which have not been transferred to a risk carrier located in the EEA.
A breach of any of these requirements will render an insurance contract null and void, although the ability to enforce the nullity of the contract will be limited to the policyholder, insureds and beneficiaries.
Additionally, the French insurance supervisor, ACPR, will retain the ability to sanction British insurers having concluded contracts on the basis of the EEA passport.
“This ordinance shows quite how real the threat of a no deal Brexit is in the mind of the French authorities but ultimately provides some very welcome clarification,” said Yannis Samothrakis, Partner at Clyde & Co in Paris.
“Claims can be paid by UK insurers in the EEA in the event of a no deal Brexit but the ability of those carriers to renew policies will be restricted unless they have an EEA entity,” he continued.
“Luckily the majority of insurers are ahead of the game but this is a stark reminder to others that the end of passporting is coming soon.”
