AIG Multinational - Navigating Through Brexit
Brexit as a topic has been all consuming since the UK voted to leave the EU, in the past 12 months. It has been like a soap opera with, depending on your point of view, villains, heroes and cliff hangers on a daily basis.
This article is intended to explain to brokers and clients as to how AIG can assist with writing UK risks post Brexit*
*For the Purpose of this article, Brexit refers to January 31, 2020 or any earlier or later date as negotiated between the UK and the EU.
How the situation currently stands
In the time before Brexit , there were, and currently are, 2 options to write UK located risks from Ireland:
1. Write the risks on a freedom of service (FOS) basis or
2. Request a local policy be issued via the AIG Multinational Process.
What happens after Brexit*?
AIG Ireland will have the following options available to write UK located risks:
In the case of a “no deal” scenario
Write the risks under the UK’s Temporary Permissions Regime (TPR), this allows AIG Ireland to continue to write risks in the UK for up to 3 years, in fundamentally the same way as it did on a FOS basis prior to Brexit.
In the event of a deal
AIG can continue to write the risks on a FOS basis during the transition period, so basically no change to the situation pre-Brexit.
Of course it is still an option to request a local policy to be issued via the AIG Multinational Process if required.
At the end of the TPR or transition period, what will happen?
The following are the possible outcomes, however as with everything linked to Brexit this could change or evolve.
At the time of writing this article it is anticipated that AIG Ireland will still have the following options to write UK located risks ;
1. Request a local policy be issued via the AIG Multinational Process.
2. Write the risks on a non-admitted basis, provided that no regulated activity takes place in the UK (this is preferable for corporate customers and not for compulsory insurance).
With the second option, consideration must be given to what constitutes a “regulated activity in the UK”.
As with everything linked to Brexit, there may be further developments. There may be further agreements negotiated between the UK and the EU following the transition period. However it would be best to assume that it is unlikely that an equivalent of the current FOS will be in place.
Claims
As regards claims handling activities, the following is how AIG Ireland will deal with this important issue.
AIG Ireland is a branch of AIG Europe S.A. (AESA). AESA has established a regulated branch in the UK which is duly authorised to handle claims in the UK. Currently all branches of AESA who have written risks in the UK can therefore legally seek support from the UK to manage and handle those claims.
For AESA branches, such as AIG Ireland, handling claims themselves without the involvement of the AESA UK branch, the following is the case.
Currently before Brexit
AIG Ireland is allowed to service its business (handling clams) in the UK on a FOS basis.
During the TPR or Transition Period
AIG Ireland can continue to service existing business (handling claims) in the UK in fundamentally the same way as it did on a FOS basis.
After the expiry of the TPR or Transition Period
Under the transitional relief regime introduced in the UK, AIG Ireland will be able to continue to service its existing book of business written in the UK (including handling claims) for 15 years.
For risks written after the expiry of the TPR or transition period, the handling of claims will be dealt with in accordance with the options noted earlier, being:
1. Request a local policy be issued via the AIG Multinational Process.
2. Write the risks on a non-admitted basis provided that no regulated activity takes place in the UK (this is preferable for corporate customers and not for compulsory insurance).
Therefore the issue of carrying out regulated activities in the UK will need to be clarified.
More Information
For further information, please feel free to contact me directly at james.bohan@aig.com or call me on +353 1 208 4958.