ABI welcomes UK-EU transition deal

The ABI has welcomed a transition deal between the UK and the EU as critical to the insurance industry. 

“It is a relief to hear that the Government and the EC are recommending a transition deal is agreed at EU Council this week,” said ABI director general Huw Evans.

“With annual insurance contracts coming up for renewal it was critical to provide some temporary certainty to insurance customers on issues like driving in the EU and the EHIC.

“However, we still need to see agreements that EU and UK regulators can fully co-operate during this period so they can begin to solve issues like the continuity of insurance contracts.”

UK and EU Brexit negotiators, David Davis and Michel Barnier announced that they have agreed on a two-year transition period for the UK’s exit from the EU. They also agreed that a “backstop” solution will be in place to avoid a hard Irish border.

The two sides issued a new, 129-page draft treaty that was awash with green highlighter denoting final agreement on large areas of the legal text.

Andrew Pilgrim, director of Financial Services and government at corporate services group EY said that financial sector firms across the continent will be happy with today’s announcement: “Financial Services firms across Europe will be pleased to hear that the terms of the transitional deal have been agreed between the UK and EU negotiating teams. Helpfully, the deal provides for continuing legal frameworks and market access between the EU27 and UK until the end of 2020. This includes ongoing recognition of passporting rights, data sharing and contract continuity.

He then outlined what needs to happen next.

“We will now await the response of financial supervisors in the UK and across Europe,” he said. “In the light of this important agreement, which will be welcomed by all parties and could significantly mitigate cliff edge risks, authorities now need to decide if they need to wait for formal ratification of the agreement before they can adjust their Brexit implementation requirements.

“This would provide the industry with certainty months ahead of a signed treaty and support the smooth and efficient functioning of financial markets.”

Barnier did, however, say that none of this is “legally binding” until a whole treaty is organised and published before the Brexit deadline one year from now. But, he did describe the agreements as a “decisive” moment for efforts to avoid Britain being left without a deal.