Significant Brexit Risks Facing Insurance Customers

Following confirmation that insurance customers could be at risk of losing cover as a result of Brexit, Fianna Fáil Spokesperson on Finance Michael McGrath has expressed concern at the lack of engagement with customers on the issue.

Deputy McGrath commented, "The issue primarily centres on insurance companies prudentially regulated in the UK or Gibraltar but operating here in Ireland under European freedom of services rules.

"If these rules are removed in a ‘no deal’ Brexit scenario, these companies will effectively be unregulated in Ireland and the insurance cover provided to customers will be in all likelihood invalidated.

"It has been confirmed that there are over 160 companies currently operating in Ireland which are prudentially regulated in the UK or Gibraltar.

"These companies have sold €2.5 billion worth of insurance to customers in Ireland in 2016."

He added: "If even a fraction of these companies do not take the appropriate action then customers could be left high and dry when Brexit becomes a reality.

"What concerns me most is the fact that customers have not been informed of the current situation and we simply do not know which companies are taking corrective action and which ones are not."

He says that the "worst case scenario" is if a ‘no deal’ Brexit takes place and an accident occurs after 29 March 2019 then the customer could very well be left without cover if the insurance company remains prudentially regulated in the UK and Gibraltar.

"This outcome would be unacceptable and steps must be taken now to protect the interests of customers," says Deputy McGrath.

He is now calling on the Central Bank, in its consumer protection role, to inform customers of the potential risks involved.

"Insurance companies too have a responsibility to take the required regulatory steps to ensure customers are fully covered in the event of Brexit," he points out.

"Nobody wants a hard Brexit but we must be alive to the possibility of one and the impact of a ‘no deal’ Brexit on consumers of insurance is another issue that should focus the minds of Brexit negotiators in the months ahead."