IUA publishes Brexit contract continuity clause

A Brexit clause has been published by the International Underwriting Association to help companies manage insurance contracts as the UK leaves the European Union.

The Brexit Contract Continuation Clause aims to clarify how firms will continue to pay claims despite any business disruption caused by a situation in which adequate transitional arrangements are not agreed.

Insurers currently relying on the EU financial services passport to conduct cross-border business between the UK and continental Europe may not be licenced to continue providing cover, or pay claims, on existing contracts after March 2019.

The new clause, therefore, allows a risk to be placed with both a UK domiciled insurer and a ‘contingent’ EU-based insurer. In the event of any Brexit difficulties, this contingent insurer will step in and fulfil any policy obligations that the original carrier is no longer able to cover.

Chris Jones, the IUA’s director of market and legal services, said: “The Brexit process continues to be quite uncertain in the nature of its final outcome and the future trading relationship trading relationship between the UK and remaining EU states.

The clause will be freely available from the IUA clauses website.