What is Brexit?
On 23 June 2016 a referendum was held in the United Kingdom by which British citizens had their say on whether to remain part of the European Union or leave (leave or remain). The majority of the voters voted in favour of the exit (so-called. Brexit).
On 29 March 2017 the United Kingdom notified the European Council of the start of the process of withdrawal from the EU, invoking Article 50 of the Treaty on the European Union, under which any member state may decide to withdraw from the European Union in accordance with its own constitutional arrangements. In this case it must notify the European Council of its intention to do so and negotiate a withdrawal agreement, establishing the legal bases for a future relationship with the European Union.
The negotiators have had a 2-year time frame for concluding the agreement, starting from the date when the application of Article 50 was requested. Following a request by the United Kingdom, this period was subsequently extended by the European Council until 31 January 2020. The agreement on the United Kingdom's withdrawal from the EU was approved by the qualified majority of the member states, obtained the European Parliament's consent on 29 January 2020 and became effective on 1 January 2021.
As from 1 February 2020, the United Kingdom is no longer an EU Member State and is no longer represented in the European institutions.
The withdrawal agreement envisaged a transition period until 31 December 2020 during which the EU legislation continued to apply as if the United Kingdom were still a Member State.
As from 1 January 2021 UK operators pursuing business in the European Union (therefore also in Italy) are subject to the regulation applicable to entities from third countries, without prejudice to the provisions of decree-law no.183/2020 "Milleproroghe" (Thousand Extensions Decree) of the Italian Government, introducing specific national transitional measures for existing contracts.
What happens after Brexit?
As from 1 January 2021 UK insurance undertakings and intermediaries, which are now third-country operators, may no longer pursue business under the European passport regime but must be authorized by IVASS to take up insurance business under the right of establishment from a non EEA country (Branch of an insurance undertaking from a third country, Section II of the Register) according to the provisions of the Insurance Code and of the relevant regulations. They cannot, however, pursue insurance business in Italy by way of free provision of services.
According to the “Milleproroghe” decree-law, insurance undertakings with head office in the United Kingdom which, until 31 December 2020 were licensed to carry out business in Italy under the right of establishment and/or the freedom to provide services, have been removed from the lists kept by IVASS as from 1 January 2021. These undertakings shall continue their business limited to the management of existing covers, without commencing new business or renewing existing contracts, until their maturity or until any other deadline defined by the undertaking in a specific plan to be submitted to IVASS. IVASS shall ensure adequate public disclosure of this activity.
More specifically undertakings must:
- inform policyholders, insureds and those entitled to insurance benefits of the operating regime applicable to them, within 15 days of the end of the transitional period, also by disclosing it in their website;
- submit to IVASS, within 90 days of the end of the transitional period, a Plan detailing the measures allowing them to regularly and expeditiously execute the contracts and covers existing at that date, including the payment of claims;
- submit, every year, a report to IVASS illustrating the state of implementation of the Plan.
Consumers (policyholders, insureds and those entitled to insurance benefits):
- must be informed by the undertaking based in the UK about the arrangements in which the undertaking will continue to do business; such information may also be published only on the undertaking’s website;
- as from 1 January 2021, may withdraw from the contracts with a duration of more than one year without any additional charge, informing the undertaking in writing, or avail themselves of the other means of terminating the contract. The withdrawal shall take effect from the expiry date of the first annual premium following the year of the withdrawal;
- may not use tacit renewal clauses;
- may send complaints directly to the undertaking, according to the terms and conditions envisaged in ISVAP Regulation No. 24/2008 and, where the dispute is not resolved, to IVASS.
In view of the withdrawal of the United Kingdom from the European Union, IVASS - already in 2018 - requested insurance undertakings having their head office in the United Kingdom to:
- adopt specific contingency plans to ensure service continuity and the performance of the insurance contracts concluded in Italy;
- inform Italian customers, without delay, on the measures adopted and on their impact on existing contracts.
For further information on this point see the dedicated FAQ.
IVASS, in collaboration with EIOPA (European Insurance and Occupational Pensions Authority) and the other national authorities, is following the adoption and correct implementation of contingency plans and fair disclosure to policyholders on the possible consequences of Brexit.
On 3 October 2018 IVASS sent UK undertakings pursuing business in Italy a letter, drawing their attention to the need to take the following action without delay:
- send adequate information on an individual basis about the impact of Brexit to their Italian policyholders and beneficiaries, according to the guidelines contained in the EIOPA Opinion;
- publish similar information on their internet site;
- give appropriate instructions to their distribution networks about the information to provide to their current and potential customers.
On 10 November 2020 IVASS published a Press release informing Italian policyholders on the effects of Brexit on UK insurance operators and on existing contracts.
Communications relating to a no-deal Brexit scenario, no longer relevant and applicable, are available at the following link.
19 January 2021