Spain: Contingency measures following no-deal Brexit published

Contingency measures following a no-deal Brexit guarantee continuity of insurance contracts and smooth adaptation to new regime for British insurers.

What is all about?

Brexit month is finally here –or is it? Interests at stake on both sides of the Channel, fearing consequences of a no-deal Brexit, may end up crystalising in a delay and extension to Article 50 of the TEU.

Whatever the case, as things stand now, the UK is due to leave the EU on 29 March, 2019, regardless of whether there is a deal with the EU or not.

In an effort to mitigate consequences for citizens and businesses of a no-deal Brexit the Spanish Council of Ministers approved last 1 March a Royal Decree on Brexit contingency measures covering a wide range of issues –from healthcare to travel to financial services and insurance.

Continuity of insurance contracts

The guarantee for continuity of those insurance contracts which entered into effect prior to the withdrawal of the UK from the EU is one of those above-mentioned measures contained in said Royal Decree which would be triggered in case of a no-deal Brexit.

Spain is therefore following the recommendations issued by the European insurance regulator EIOPA on 19 February 2019. EIOPA then sought to allay concerns regarding “contract continuity”, the uncertainty about how UK insurers which have validly underwritten EEA business prior to Brexit, would be able to service that business from 30 March, 2019, the point at which the UK would become a third country with no right to “passport” authorisations within Europe –see our previous post here. [LINK TO MIGRATED CONTENT TO BE ADDED]

EIOPA’s recommendations were, in fact, anticipated by a resolution from the Spanish insurance regulator DGSFP dated 9 November 2017 which already by that time expressed support for the continuity of contracts validly underwritten by UK insurers.

Now the “contract continuity” principle will apply ex lege in case all of the following circumstances are met:

  • There is an insurance contract,
  • In which an insurer provides services in Spain while
    • having its registered office in the UK or Gibraltar, and
    • being authorised or registered by the Prudential Regulation Authority (if in the UK) or the Gibraltar Financial Services Commission (if in Gibraltar),


  • The insurance contract has entered into effect prior to the effective date of the withdrawal of the UK from the EU under a no-deal scenario.

Aiming at dispel any doubts on the above, the Royal Decree also makes clear that continuity of insurance contracts will not be affected by the British or Gibraltarian insurers losing their “passporting” rights –which, as a general rule, will happen as of day 1 after Brexit, i.e. at the time at which the UK and Gibraltar will become third countries for the purposes of the freedom to provide services and right of establishment provisions within the EEA.

Temporary regime for British and Gibraltarian insurers

UK-or-Gibraltar-based insurers could nonetheless benefit from a temporary regime aiming at ensuring that their adaptation to third-country regimes does not translate into a disruption in the services provision related to the insurance contracts.

In particular, a British or Gibraltarian insurer could maintain its “passporting” rights in Spain for a nine-month period following effective date of the UK withdrawal from the EU so as to:

  1. Carry out the orderly run-off or assignment of in-force insurance contracts to a duly authorised entity, or
  2. Request authorisation in Spain –e.g. by way of setting-up or acquiring a subsidiary.

What’s next?

British and Gibraltarian insurers providing services in Spain under the umbrella of their “passporting” rights now have a clear, solid guidance on what will happen –continuity of contracts until run-off– and what to do –applying for authorisation?– in case of a no-deal Brexit.

Contingency measures are on the table. It is now for the insurers to prepare for the no-one-wants-that scenario –a withdrawal without agreement.



Authored by Luis Alfonso Fernandez and Juan Valcárcel



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