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Brexit: Impacts of the UK’s withdrawal from the EU on the Slovak insurance sector

11 February 2021

The European Union and the United Kingdom concluded the “EU-UK Trade and Cooperation Agreement” on 24 December 2020. The Agreement entered into force on 1 January 2021, as of when the United Kingdom became a “third country” vis-à-vis the EU and was therefore no longer part of EU economic structures. That date also marked the end of the application of all EU primary and secondary legislation to the UK. At the same time, the EU and UK have approved a Joint Declaration on Financial Services Regulatory Cooperation, which states that both parties will, by March 2021, agree on a Memorandum of Understanding (MoU) establishing the framework for this cooperation and that the parties will discuss, inter alia, how to move forward on both sides with equivalence determinations.

The Agreement provides no basis for passporting rights in the area of financial services; as a result, UK-authorised financial market participants may not operate in the territory of Slovakia unless they establish a branch of a foreign financial institution or a subsidiary in the country or unless they establish a subsidiary in another EU Member State and notify authorities in Slovakia in accordance with the single licence principleUnless they do so, UK-authorised insurers may not conclude new insurance contracts in Slovakia from 1 January 2021; at the same time, such insurers are required to meet their obligations arising under insurance contracts concluded in Slovakia before that date.

Národná banka Slovenska wishes to draw attention to the potential impacts of the above on the management of insurance contracts and pension products. All insurance contracts concluded before the end of 2020 remain in force and are subject to international regulatory and supervisory standards, primarily in regard to consumer protection, the prevention of money laundering and terrorist financing, and the fight against tax evasion. In order to ensure the fulfilment of agreements, the EU’s supervisory authority responsible for the insurance sector (EIOPA) has created a platform for cooperation with the United Kingdom. For its part, in order to ensure no disruption to the provision of services to customers, Národná banka Slovenska remains actively engaged in the related dialogue, monitoring and cooperation at the EU level and is coordinating its procedures in accordance with the recommendations of the European supervisory authorities: the European Insurance and Occupational Pensions Authority (EIOPA), the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA).

EIOPA has issued a Brexit Consumer Guide providing practical information for consumers with a life insurance policy or pension from the UKA version of the guide in the Slovak language is available here.

If you have any questions about your insurance contract or an insurance claim, contact your insurer or financial intermediary.