Skip to main content

Clifford Chance

Clifford Chance


The insurance industry is facing some challenging legal issues in the year ahead

What can the re/insurance industry expect from 2019?

Coming as no surprise, we expect the first quarter to continue to be dominated by Brexit. A number of insurers will now have completed their contingency plans, but will be bedding down their new operating models for their UK and European business. However, others will continue to monitor the political developments closely; none perhaps more so than Lloyd's and developments on contract continuity in the event of a hard Brexit on March 29.

Intermediaries will also be looking out for any guidance in the new year from the European Insurance and Occupational Pensions Authority (Eiopa) and EU and UK regulators on the role of MGA's and UK placing brokers for EU business. We may also see feedback on the reverse branching model.

The Financial Conduct Authority (FCA) is due to release its (delayed) interim report on the wholesale insurance market study early this year, which has the potential to have a material impact on that part of the market. The FCA will also be looking at pricing practices in retail insurance through another market study (particularly new customer offers).

From its side, the Prudential Regulation Authority will continue to monitor market stability and interrogate balance sheet risks from certain business lines. We envisage continued calls from the market for an overriding competition objective for both regulators so that the prudential and consumer facing objectives of each regulator can be better balanced.

The recently implemented directives in insurance distribution and data protection may well have a market impact. The Insurance Distribution Directive (IDD) requires a greater involvement from insurers in certain distribution channels, in terms of both product oversight and the customer journey. The GDPR has been in force for longer, but 2019 may see the first set of sanctions to be implemented. We will monitor the impact of both closely.

We also expect to see an acceleration of insurtech related transactions, building out from the rapid growth in 2018. The use of blockchain is much discussed and 2019 could be the year when this is really embraced by the sector, as it has been reported that chief executives expect to double their investment in blockchain this year.

Finally, we would envisage continued activity in the run off sector – and in both life and non-life – partly driven by regulatory and capital pressures.

A challenging year ahead; but one with some great opportunities for those best able to take advantage of these developments.

This article first appeared in Insurance Day