6 August 2020
A no-deal Brexit looms large again after Michael Barnier, the EU's top negotiator, warned of 'no progress' on key issues at last month's trade talks. Although negotiations are expected to intensify, if a Free Trade Agreement (FTA) is not agreed in the next few months, access to the EU would change from passporting rights, based on the EU single market directives, to rules of the World Trade Organisation (WTO). Exiting on WTO rules will have significant implications for UK insurers who cannot write EU risks on a services basis, save in limited circumstances. The position is somewhat better for UK reinsurers who do not face the same access constraints but who could be subject to local restrictions. The position for UK reinsurers would also benefit from a positive equivalence decision under Article 172 of Solvency II.