Part VII transfer

Under a Part VII transfer, an insurance company will set up a separate legal entity in an EU country that will service policies with EU clients after Brexit. A submission to a UK court will be made to transfer the book of business to this EU entity. Once approved, clients will need to be duly informed that their business will move. The process usually takes approximately 18 months. Prior to Brexit, 10 such applications were made to UK courts on average per year.^[4][5][6] Given the volume of transfers in the run up to the date when the UK leaves the EU, there have been reports about delays in court hearings.^[7]

The Prudential Regulation Authority (PRA) which oversees insurance businesses has proposed increasing the fee it charges companies for such business transfers to GBP 20,000 effective 1 March 2019 given the complexity of the transaction.^[8]

In a similar fashion, banks use the Part VII transfer framework to move their swap business to EU entities.^[9][10]

Approaches and timelines chosen by companies vary given the cost and complexity of the transfer. While some companies have already transferred their business or are in the process of it, others are exploring alternative options.^[11] As an alternative to Part VII transfers, some financial institutions have alternatively opted to sign new contracts with clients in their post-Brexit location.^[12]

• Financial Services and Markets Act 2000, Part VII
• The FCA’s approach to the review of Part VII insurance business transfers