A hard Brexit ‘could cause hike in motor insurance bills’

MOTOR insurance prices could skyrocket and tens of thousands of motorists could be left without policies in the event of a hard Brexit, the Central Bank has warned.

Deputy governor Ed Sibley said that UK and Gibraltar-based firms will no longer be able to meet their obligations to EU policyholders if a deal on financial services between Britain and the Europe is not made.

If these firms don’t act, Mr Sibley warned, these companies will no longer be able to provide cover, collect premiums or settle claims.

And their withdrawal from the market will send premiums soaring.

Speaking at the DCU Brexit Institute yesterday, he said: ‘In the event of a hard Brexit, UK firms can no longer avail of the financial services passport to offer services into Ireland, and Irish firms can no longer ‘passport’ their business into the UK.

Under current EU law, banks and other financial companies can be authorised to do business in one member state of the EU, or the slightly wider European Economic Area, and operate or ‘passport’ across all member states without having to be separately authorised in each country.

‘The potential loss of EU authorisation will affect the ability of UK and Gibraltar-based insurance undertakings to continue performing certain obligations for EU policyholders and vice versa, ’ Mr Sibley said.

Gibraltar is the prime location for foreign companies selling motor insurance in Ireland, with the territory serving as the regulatory base for 11 out of the 24 overseas companies registered here.

Some 14,000 Irish motorists were affected when Gibraltar-based Enterprise Insurance collapsed in July 2016 with 255 claims valued at an estimated €6.2million still on its books. And Zenith Insurance, also based in the territory, decided to stop providing policies in Ireland on foot of Brexit pressures in August last year, having built up a 5% share of the market.

Unless such firms have put in place plans to allow them to continue trading in the EU in the event of a hard Brexit, their policies will no longer be legally recognised in Ireland or other member states. The Central Bank is concerned providers are not taking necessary steps to prepare.