Bank alerted courts to rise in insurance cases over Brexit fallout

Bank boss: Mark Carney THE Bank of England has admitted to warning UK courts of a deluge of insurer applications ahead of Brexit, having kept it private amid fears over how policyholders might react.

Minutes from a November meeting of the Bank’s Financial Policy Committee (FPC) show members were given “early estimates” on the number of policyholders impacted if insurers lost permission to collect premiums and pay out claims on cross-border contracts after Brexit.

It is the latest revelation around Brexit preparations being made by both the Government and regulators as banks, asset managers and insurers prepare for the loss of passporting rights, which currently grant cross-border access throughout the EU.

In light of the potential “risks”, the committee was told insurers were planning to either transfer contacts to new entities or gain new permissions for existing operations, a process that could take between 12 to 18 months.

While the FPC and Prudential Regulation Authority tried to make sure plans were as “robust as possible”, the Bank of England “had written to the High Court to alert them to the potential for increased applications”.

With the help of the Treasury, the Bank, led by Governor Mark Carney, said it was also “drawing up options to protect UK policyholders”, which in some cases required new laws or cooperation with the EU.

But all this information was redacted from the FPC’s record of its September meeting, when it said work was “under way, but not yet finalised”. It feared the affect that uncertainty would have on insurance policyholders.

But assurances from the Treasury paved the pay for public disclosure of those risks.

“In light of this commitment, the committee judged the risks of prompting unnecessary action by policyholders had reduced and agreed that the publication of its Q3 discussion on the risk of a discontinuity in insurance contracts could now be published,” the FPC’s November meeting minutes showed.