LONDON (REUTERS) - Insurance companies must spell out to new and existing customers the possible impact of Brexit on billions of euros in cross-border policies, a European Union watchdog said on Thursday (June 28).
The European Insurance and Occupational Pensions Authority (EIOPA) said national regulators in the bloc must remind insurers of their duty to tell customers about the consequences of Britain's departure from the EU next March.
"National supervisory authorities are required to ensure that insurance undertakings and insurance intermediaries take appropriate contingency measures to ensure the continuity of services for cross-border insurance contracts," EIOPA said in a statement.
"Customers should be made aware in a timely manner of the implications of these measures both for existing and for new contracts concluded before the withdrawal date."
Britain and the EU have agreed a transition deal to 2020 to ensure business continuity but until it is ratified there is a risk of a disorderly Brexit.
The Bank of England said on Wednesday that insurers in Britain and the EU may not be able to service their existing contracts, such as paying claims or receiving premiums, without local authorisation after next March without a transition.
This could affect around 27 billion pounds (S$48 billion) of insurance liabilities and 10 million British policyholders, the BoE said.
Around 55 billion pounds of insurance liabilities and 38 million European Economic Area policyholders could also be hit.
The British government is willing to extend authorisation of EU financial firms operating in the country beyond March to ensure continuity in contracts.
So far the bloc has shown no sign of reciprocating and EIOPA's statement made it clear it was for insurers to take action, echoing the bloc's banking watchdog on Monday.
Jon De Beer, a senior adviser at the Association of British Insurers, said it was exasperating that EIOPA continues to ignore the interests of millions of policyholders across the EU.
"As the Bank of England Governor has said, this needs a political solution because industry solutions are inadequate,"De Beer said.
Some insurers operating in Britain are dealing with Brexit uncertainty by opening new hubs in the EU, but they may not be able to transfer all European contracts to them before Brexit.