Lloyd’s proposed transfer of certain EEA insurance business to Lloyd’s Brussels
Please note that the dates of the Sanctions hearing and the Effective Date have been changed – see Important updates.
On 23 June 2016, a majority of the people who voted in the referendum, voted for the UK to leave the EU. The exit process was then triggered by the invoking of Article 50 of the Lisbon Treaty on 29 March 2017. The UK and the EU leaders endorsed an Agreement on the Withdrawal of the United Kingdom and Northern Ireland from the EU on 17 October 2019 and that Agreement was ratified and entered into force and the UK left the EU on the same date, 31 January 2020.
The Agreement includes a transitional period during which there will be legal and regulatory continuity between the UK and the EU on the basis of the existing rules from the date the UK leaves the EU until the expiry of such period. The transitional period is expected to end on 31 December 2020.
Certain UK insurers that are Lloyd’s Members, currently enjoy EEA ‘passporting’ rights to enable policies to be managed within Europe without the need for further authorisation.
As a consequence of Brexit, current EEA passporting is expected to cease at the end of the transition period on 31 December 2020. Lloyd’s is therefore proposing, on behalf of the Members, to transfer certain policies from the Members to Lloyd’s Insurance Company S.A. (“Lloyd’s Brussels”). Lloyd’s Brussels is an insurance company incorporated and regulated in Belgium and is a wholly owned subsidiary of Lloyd’s.
Unless specifically excluded, the policies (or parts of policies) to be transferred under the proposed transfer are those where all or part of the risk underwritten at Lloyd’s is located in an EEA state or where the policyholder is resident in the EEA, such that the policy (or part of the policy) could not be managed post-Brexit from the UK without breaching legal or regulatory requirements (“Transferring Policies”). The proposed transfer will ensure that Transferring Policies can be compliantly managed after Brexit, including in relation to the payment of claims.
If approved by the High Court of England and Wales (“High Court”), the proposed transfer will not change the terms and conditions of any policy, except that Lloyd’s Brussels will become the insurer and Data Controller in respect of Transferring Policies. The proposed transfer has been carefully designed to ensure that it will not change how policies operate. Policyholders will see no direct administrative change as a result of the proposed transfer and the process for making claims and any payments that may be due in settlement of a valid claim is therefore unaffected by the proposed transfer. If approved by the High Court, the proposed transfer is expected to take effect on 30 December 2020.