Aviation insurers launch Brexit continuity clause - UK trade body
Insurance policies typically last a year but some can last for two years or longer. Britain and the EU hold Brexit talks on Monday and Britain is due to leave the EU in March 2019.
"The aim of the new clause is to provide additional certainty for clients as the UK leaves the European Union," Chris Jones, director of legal and market services at the IUA, said in a statement.
"Without any new trade agreement or business continuity arrangement, it is possible that some insurers may not be in a position to continue providing cover or pay claims on cross-border contracts."
Insurers need to set up EU subsidiaries to carry on business in the EU if Britain does not remain part of the European single market. Analysts say smaller players may instead choose to pull out of Europe.
The clause allows an insurer to transfer its policy to another insurer which is still able to trade in the EU and has the same or higher credit rating.
The clause is the first of its kind and could be adapted to other classes of insurance business, an IUA spokesman said.
The clause was developed by the Aviation Insurance Clauses Group, whose members include large reinsurers Hannover Re (>> Hannover Rückversicherung), Munich Re (>> Muenchener Rueckversicherung) and Swiss Re (>> Swiss Re).
(Reporting by Carolyn Cohn)