European Union: Travel Insurance Cost Impact Warning On No-Deal Brexit (Pinsent Masons Insurance Briefing, 18th September 2019)

Last Updated: 2 October 2019
Article by Nicholas Bradley, Colin Read and Alexis Roberts

Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.

The topics we're focusing on this week include:

Travel insurance cost impact warning on no-deal Brexit

The cost of travel insurance premiums could increase significantly if the UK leaves the EU without a formal withdrawal agreement in place, while those with pre-existing medical conditions could find it harder to obtain cover, according to insurance expert Sophia Hytiris of Pinsent Masons, the law firm behind Out-Law. A Financial Conduct Authority (FCA) consultation on proposals which would require travel insurance providers to direct customers struggling to obtain cover due to pre-existing medical conditions to a directory of firms who may be able to assist closes on 15 September. Hytiris said that these customers would be particularly vulnerable in a no-deal Brexit scenario, as they would no longer have access to state-provided healthcare in EU member states through the European Health Insurance Card (EHIC) scheme. Read more here...

PRA: financial crime compliance function must be sufficiently senior

Senior managers responsible for financial firms' anti-money laundering and counter-terrorist financing compliance functions must be of sufficient seniority to perform that role effectively, the Prudential Regulation Authority has said. The PRA has written to regulated firms in support of a recent opinion on the interaction of AML and CTF compliance with prudential supervision, issued by the European Banking Authority. In its letter, it said that it would continue to monitor firms' compliance with their AML and CTF compliance responsibilities as part of its broader supervision of firms. Regulatory law expert David Hamilton of Pinsent Masons, the law firm behind Out-Law, said that the letter was "a useful prompt for firms to assess whether their financial crime systems and controls would pass a resourcing 'litmus test'." Read more here...

Algorithms pose unlawful discrimination risk for insurers

There is risk that insurers might unlawfully discriminate against their customers by using algorithms to process customer data, the International Association of Insurance Supervisors (IAIS) has warned. "Algorithms can be complex and are often treated as proprietary and highly confidential in nature," the IAIS said in its paper. "Thus, there can be a lack of transparency and strong asymmetry of understanding between those who design and use algorithms and customers and supervisors trying to understand the outcomes generated by these algorithms." In its paper, the IAIS set out how insurance market regulators might respond to concerns over the use of algorithms. It stressed existing regulatory principles in relation to risk management and the fair treatment of customers are relevant to the use of the technology, in addition to other aspects of regulation focused on transparency and simple, clear customer communications. Read more here...

Europe asks financial services firms to finalise Brexit plans

The European Commission has called on financial services firms to finalise their preparations for Brexit before the current date for the UK's withdrawal from the EU of 31 October 2019. In a communication to other European bodies, including the European Parliament and European Council, the Commission said that while most financial services firms "have largely prepared for a withdrawal without an agreement", those which had not should make sure they were ready for a no-deal Brexit. Financial services expert Tobin Ashby of Pinsent Masons, the law firm behind Out-Law, said: "The measures referred to by the EU Commission are not focused on helping financial services firms honour individual contracts with their customers. Financial services firms will probably have already considered what is needed from the Brexit perspective for any cross-border business the last time a hard Brexit appeared imminent. However, given the time elapsed since April, we would expect local regulators to have a clearer view by now on how they are likely to treat existing cross-border contracts emanating from the UK and firms should take the opportunity to reconsider their approach to existing business against regulatory guidance and any changes to relevant books of business since then."    Read more here...

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