XL Catlin’s London-based re/insurance operations have announced that an innovative new contract clause will be added to their policies to address concerns that continuity may be affected by the UK’s anticipated departure from the European Union (EU).
The clause, which will factor in uncertainties like loss of passporting rights, will be included in re/insurance policies written by Catlin Insurance Company Ltd (CICLUK), and XL Catlin’s syndicate 2003 at Lloyd’s of London.
Post-Brexit, these businesses will remain in the UK, although XL Insurance Company SE (XLICSE) – XL Group’s main insurance company platform in Europe and Asia – will move to Dublin, Ireland as part of the Brexit plans that XL announced last year, which remain unaffected by AXA’s recent acquisition of the Group.
XLICSE has Societas Europaea status, meaning that it can move to Ireland without becoming a different legal entity, and without a court sanctioned portfolio transfer.
The move will also mean that XLICSE’s policies will not rely on the new clause, and XL intend to leverage this status by adjusting the standard London Market continuity clauses to make XLICSE an additional party to the policy from inception as a contingent insurer.
If a policy’s performance becomes impermissible after Brexit and cannot be amended to allow CICLUK or the Syndicate 2003 to perform it, XLICSE will be obliged to perform the policy, with automatic cancellation and pro-rata return of premium if this is not possible.
Paul Greensmith, UK Country Leader & Director of London Market Wholesale, XL Catlin, said: “Our innovative clause offers significant advantage by minimising the risk that policies will be cancelled, by making XLICSE a contingent party to the policy.
“Effectively, XLICSE will act as a back-up. A political solution may yet be forthcoming that ensures polices can be performed post Brexit, but in the absence of one we believe this clause gives our clients and brokers the certainty they expect and deserve from their insurance partner.”