LONDON, June 19 Aviation insurers have launched
a model contract continuation clause to keep policies in place
after Britain leaves the European Union, trade body the
International Underwriting Association said on Monday.
Insurance policies typically last a year but some can last
for two years or longer. Britain and the EU hold Brexit talks on
Monday and Britain is due to leave the EU in March 2019.
"The aim of the new clause is to provide additional
certainty for clients as the UK leaves the European Union,"
Chris Jones, director of legal and market services at the IUA,
said in a statement.
"Without any new trade agreement or business continuity
arrangement, it is possible that some insurers may not be in a
position to continue providing cover or pay claims on
Insurers need to set up EU subsidiaries to carry on business
in the EU if Britain does not remain part of the European single
market. Analysts say smaller players may instead choose to pull
out of Europe.
The clause allows an insurer to transfer its policy to
another insurer which is still able to trade in the EU and has
the same or higher credit rating.
The clause is the first of its kind and could be adapted to
other classes of insurance business, an IUA spokesman said.
The clause was developed by the Aviation Insurance Clauses
Group, whose members include large reinsurers Hannover Re
, Munich Re and Swiss Re.
(Reporting by Carolyn Cohn)