The Lloyd’s insurance and reinsurance market has announced that its Brussels base will be ready to underwrite facultative reinsurance and non-proportional excess of loss treaty reinsurance using Lloyd’s Brussels paper from 1st January 2019 across all markets in the EEA.
At the same time the market said that if the UK fails to secure Solvency II reinsurance equivalence in 2019 it will be ready to underwrite the remaining treaty reinsurance business through Lloyd’s Brussels from 1st January 2020 as well.
Vincent Vandendael, Lloyd’s Chief Commercial Officer and Lloyd’s Brussels CEO, commented, “We expect that, following Brexit, the UK will apply for and receive Solvency II reinsurance equivalence. However, we are working to ensure that our reinsurance customers can continue to access the market’s specialist policies in the event that the UK leaves the EU without a transitional agreement or equivalence.”
Lloyd’s can continue to underwrite reinsurance in the EEA states until 29th March 2019 with the confidence that all valid claims will be paid, it said. After that date, if transitional arrangements or Solvency II equivalence are in place, underwriters will be able to continue doing its business via syndicate paper as it does today.
But if the worst happens and the UK crashes out of Europe without any transitional arrangements or equivalence in place, Lloyd’s Brussels will be able to underwrite facultative reinsurance and non-proportional excess of loss treaty reinsurance from 1/1/2019 across all markets in the EEA.
While the remainder of the treaty reinsurance business can be written as cross-border business on syndicate paper from EEA States under World Trade Organisation (WTO) terms, except for in Germany and Poland.
If equivalence isn’t secured and no WTO equivalent transitional arrangement is in place, the rest of the treaty reinsurance business will be written through Lloyd’s Brussels from 1st January 2020.
Lloyd’s said it is also investigating a bespoke solution for Lloyd’s Brussels to be able to process proportional treaty reinsurance business in 2019, which it hopes also apply to non-proportional treaty.
Any solution like this would be available for managing agents processing treaty in a similar way to delegated authority, as long as they meet all the technical requirements.
Vandendael added, “Along with other London Market partners, we continue to strongly make the case that an EU equivalence decision with respect to the UK’s reinsurance framework should be secured as soon as possible and by no later than the end of the transition period. It is clear from the UK Government White Paper that the UK Government aims to achieve Solvency II equivalence of UK reinsurance regime.
“We will know before 29 March 2019 whether we have transitional arrangements. This, alongside the solutions we are working on, the market’s strong customer relationships and the commitment to pay all valid claims, will all help us maintain and grow our business partnerships across the EEA.”