Brexit

An update from Miller

On 29 March 2019, the UK will leave the European Union (EU). Negotiations continue between the UK and EU to reach an agreement as to the terms and basis on which the UK will leave. There is still much uncertainty around this and, therefore, from an insurance perspective, it is far from clear what the implications are for policy holders, (re)insurers and intermediaries. In this briefing note, we provide some information about how Miller and the wider insurance community is responding to the challenges presented by Brexit and the current uncertainties and their contingency plans. 

What is Miller doing to address this?

Our principal aim is to continue to service our clients to the same high standard as we always have done and, equally, to provide our clients with an uninterrupted service. 

Our plans, therefore, focus on maintaining our ability to operate within and in the placement of EU risks post-Brexit. Miller envisages a scenario whereby the UK becomes a third country and existing passport rights into and across EEA states are withdrawn. A consequence of this is that Miller’s existing branch offices in Brussels and Paris will no longer be able to operate as an insurance intermediary and, being a UK registered limited liability partnership, Miller will itself will not be able to conduct EU business.

To overcome this, Miller is incorporating a wholly owned subsidiary company in Belgium, and will register this company as an insurance intermediary, enabling it to undertake insurance broking activities in its own right. Our Paris office will become a branch of this company. We anticipate that this separately regulated intermediary will be in place in early 2019.

What are (re)insurers doing to address this?

We are currently working to understand (re)insurers’ own Brexit solutions in order for us to better understand the implications of their actions for you. (Re)insurers are actively embarking on implementing a variety of corporate structures that deliver their own licencing solutions to enable them to continue to write EU business. These solutions are also aimed at addressing the theoretical risk that upon a “hard” Brexit a (re)insurer may not be able to respond as intended when the policy was formed, one consequence of which might be an inability to respond to a claim. 

Many (re)insurers have been publishing details of their contingency plans or of their intentions, and may have contacted you directly to inform and give assurance to policyholders that suitable measures are in place to allay such concerns. We are maintaining a keen interest in how these solutions develop and, thus, the state of readiness of (re)insurers for a post-Brexit era. Solutions include:

1. Setting up a new company and seeking regulatory permission to become an insurance company in the EEA state of their chosen location. 

2. Transferring business from a UK firm to an EU firm using the Part VII business transfer process - this is a highly regulated and formal legal process about which policy holders must be made aware by the respective (re)insurer.

3. Utilising the versatility of a company that has an “SE” (Societas Europaea) structure – this might be done by either establishing a new company or changing the legal form of an existing company to an SE.

One of the advantages of an SE is the ability to change the company’s domicile (eg from the UK to an EEA state) retaining the same legal entity but avoiding the need for a formal business transfer.

What action has Lloyd’s taken?

Lloyd’s has been particularly proactive with its plans, and has invested time engaging with Managing Agents and Lloyd’s brokers to deliver its solution. Lloyd’s will operate a fully capitalised insurance company (LIC) domiciled, authorised and regulated in Belgium and licensed to write risks domiciled in EEA states.

The process of broking a risk to LIC will largely remain unchanged for brokers as Managing Agents in London will have delegated authority from LIC to underwrite business on its behalf. One aspect that will differ arises on risks, such as global programmes, which have an element of EU exposure. Clients will receive two policies, one of which will be for the EU portion of the risk. 

How we can help you

Greater clarity will be forthcoming as the political negotiations progress, and we continue to monitor these developments and will communicate with you when we have a deeper understanding of the impact of Brexit on the policies that we arrange. With any of the approaches noted above, Miller will be ready and able to discuss your risks that may be affected by Brexit. This includes risks located in the UK and (re)insured by EU (re)insurers and EU risks which are (re)insured by UK (re)insurers. We will take your instruction on the (re)insurers to be used on your policies.  

As ever, Miller’s focus remains on our clients, and we will be providing the necessary support through this complex process. As the situation evolves, we will update this document to enable you to stay up-to-date with developments at Miller. In the meantime, should you need to discuss any of the issues raised above, please email brexit@miller-insurance.com 

To discuss any upcoming renewals, please continue to speak to your usual contact at Miller.