Irish consumers may struggle to secure wedding, pet or gadget insurance in the event of the UK crashing out of the EU with no deal.
Central Bank of Ireland deputy governor Ed Sibley warned on Thursday that niche insurance products may decline or end altogether should a no-deal Brexit materialise. Most of such products offered in Ireland are either underwritten by UK-based insurers or channelled through intermediaries in that market.
Meanwhile, Mr Sibley also revealed that the Republic is working on legislation to allow UK and Gibraltar-based insurers and brokers to continue to service Irish customers' policies for a period of up to three years in the event of a no-deal Brexit.
"The draft legislation provides a temporary run-off regime, which will allow certain UK/Gibraltar insurers and brokers to continue to service existing insurance contracts with Irish policyholders in the event of a 'no-deal' Brexit," Mr Sibley told a risk management and supervisory conference organised by Banking & Payments Federation Ireland (BPFI) in Dublin.
“The legislation does not allow these firms to write new business, including renewable or existing policies; it is exclusively for the servicing of contracts – or policies – that were put in place prior to Brexit.”
The Central Bank is supporting the Department of Finance work on the laws, he added.
‘An industry priority’
Insurance Ireland chief executive Kevin Thompson welcomed the development, saying: "Ensuring customers maintain the benefits of their insurance cover in the event of a no-deal Brexit has been an industry priority since the UK's referendum."
The draft rules are part of a list of up to 60 pieces of legislation that the Government is working on to deal with Brexit. Taoiseach Leo Varadkar said before Christmas he would like to deal with all these items in one omnibus Brexit Bill, but that they may be divided up into separate ones.
Separately, the Motor Insurance Bureau of Ireland has said Irish insurers are getting ready to issue "green cards" to motorists planning to travel to the UK, including Northern Ireland, from the beginning of March.
In the event of a disorderly Brexit, all motor vehicles travelling between the Republic and Northern Ireland and Britain will need the document to prove they have valid insurance coverage in this jurisdiction. Motorists will need to apply through their insurance companies or brokers a month before travelling in order to get their green cards on time.
‘Cliff-edge risks’
Meanwhile, Mr Sibley said that from a financial stability prospective, the “cliff-edge risks” of a no-deal Brexit were now manageable, on the basis of work that the bank and regulated firms had undertaken.
“The Irish banking system is considerably more resilient than it was, and the most significant firms operating in Ireland across all sectors have, in line with our requirements, prepared and are executing contingency plans for a hard Brexit,” he said.
“This is not to say that a hard Brexit will not be bumpy for the economy, and disruptive for the financial system, but that it is resilient enough to withstand these bumps.”
