Insurance policies: a checklist for no-deal Brexit

From property to travel and healthcare, many areas of life involve an insurance policy. And the insurance sector, like many others, is exposed to Brexit.

At present consumers in the EU can buy insurance products from insurers based in any EU member state. On their part, insurers can sell their products in the ‘single market’ using the authorization of only one national financial regulator. This may change in the future for the UK, depending on the relationship that will be established with the EU.

What happens in the meantime? As long as Brexit is delayed, nothing changes as EU rules continue to apply in the UK. If the UK leaves the EU with the agreement negotiated by Theresa May, a transition period ensures that nothing changes until 31 December 2020. If the UK leaves the EU without a deal on 31 October 2019, however, things become more complicated.

In the event of no-deal Brexit, “it is possible that existing insurance policies will no longer be considered as valid and there could be problems with services such as making a claim,” says Insurance Europe, the European federation of national insurance associations.

This is what Insurance Europe and government sources say in preparation for such a scenario.

Car insurance

At present, motorists insured in a EU member state can drive their car in any other EU country without any extra requirement. Without a Brexit agreement, motorists insured in the UK who travel to the EU with their car may need to buy additional cover and request a Green Card, an international certificate guaranteeing that they have the necessary insurance protection. The same may be for EU motorists travelling to the UK.

Insurance Europe says:

Both UK and EU motorists should check with their insurance provider whether they are covered by their existing insurance policies and whether they need a Green Card after Brexit.

If a Green Card is needed, EU and UK motorists can request one from their insurance provider (potentially for a small administrative fee). Such a request should be made in advance of any planned trip to allow sufficient time for it to be processed.

Travel insurance

Insurance policies may be useful when travelling, for example to claim compensation for travel delays and cancellations, lost baggage, health issues or returning home earlier.

At present the European Health Insurance Card (EHIC) ensures partial protection as it gives access to state-provided medical healthcare when travelling in the European Union, Norway, Iceland, Liechtenstein and Switzerland.

Another EU regulation obliges EU airlines to compensate passengers for delays and cancellations of flights departing from EU airports. While not being comprehensive, these safety nets will no longer apply to the UK in the event of no deal Brexit.

The NHS website says: “If you are planning to visit [the EU] on or after October 31 2019, you should continue to buy travel insurance so you can get the healthcare treatment you need, just as you would if visiting a non-EU country.”

The UK government says:

If you are taking out travel insurance shortly after the UK leaves the EU, you should make sure you understand the terms and conditions of the travel insurance policy, and that you are happy with the level of healthcare and travel disruption cover it provides.

If you already have travel insurance, your insurer should let you know if there are changes to the way your policy is serviced after the UK leaves the EU.

Insurance Europe says:

EU travellers to the UK should check that their policies cover the UK before they travel.

Travellers should be aware that there are certain differences in travel insurance policies between member states.

Both EU and UK travellers are advised to check their policies and to contact their insurance provider before travelling to make sure they know what they are covered for.

Healthcare insurance

If European Health Insurance Cards (EHICs) issued in the EU are no longer accepted in the UK, and vice versa, travellers may have to pay for the health services they receive. The NHS has listed how healthcare works in the countries of the European Economic Area and Switzerland.

As well as travellers, posted workers (those who pay contributions in one EU member state but work in another) and people who receive exportable benefits (for example UK pensioners living elsewhere in the EU) may also have to deal with new arrangements. At present, these groups can use the S1 form, a certificate stating which country is responsible for their healthcare.

In the event of no deal Brexit, the British government says that S1 certificates issued in the UK may not be valid in other EU countries, but British resident in the EU “can use NHS services in England without charge when on a temporary visit to England.”

There are exceptions. British and Irish citizens will maintain reciprocal access to healthcare on the basis of a bilateral deal. Existing S1 entitlements are also protected with Norway, Iceland, Liechtenstein and Switzerland, as the UK has negotiated separate citizens’ rights agreements with these countries. Spain has guaranteed the continuation of current healthcare arrangements for 21 months in its no deal Brexit contingency plans, under condition of reciprocity. Rules may vary in each country and people will have to consider their healthcare insurance requirements before travelling.

Insurance Europe says:

EU residents planning to travel in the UK and UK residents planning to travel to the EU after Brexit are advised to ensure they have adequate travel or health insurance to cover any health services needed while travelling.

EU residents with private healthcare policies that cover care abroad will not be affected. Both EU and UK residents with private healthcare policies should check with their insurer.

Life insurance and private pensions

Private pensions are an area where the consequences of a no-deal Brexit are unclear. According to a UK parliament briefing, occupational pension schemes usually operate domestically (many cross-border schemes are related to the UK-Irish border). But there may be issues for private pensions regarding payments abroad and the legal framework allowing firms to operate across different jurisdictions.

The UK government says:

If you live in the European Economic Area and have an annuity or personal pension with a UK-based firm, your firm should have made plans to make sure you can still get payments from your annuity or personal pension, even if the UK leaves the EU without a deal.

If your firm needs to make any changes to your annuity or personal pension or the way it provides it, your firm should contact you.

If you have any concerns about whether you might be affected you should contact your firm.

Other insurance policies

Overall, what will make a difference for consumers is the location and the ability of the insurance provider to operate across borders, the conditions set out in the contract (including pending claims on Brexit day) and the cost of the insurance policy.

The UK Financial Conduct Authority urged firms to ensure that their UK customers “understand if their insurance policies are affected and are treated fairly.” If UK insurers decide to stop servicing customers in the European Economic Area after Brexit, the FCA adds, “customers should be informed in a timely manner of any such decisions and given clear and useful ‘next steps’ information and advice.”

Insurance Europe says:

UK residents who have bought a policy from an EU insurance provider should not be affected because of the steps taken by the UK government to ensure the continuity of existing policies.

EU residents who have bought a policy from a UK insurance provider should check with them whether they are still covered because not all EU member states have taken steps to ensure policy continuity.

Customers who are not sure where their insurance provider is based should contact them to ensure they will still be covered if there is a no-deal Brexit.

Claudia Delpero © all rights reserved.

Image by Rudy and Peter Skitterians from Pixabay.

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