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Brexit: The Polish parliament has passed legislation regulating the run off of insurance contracts concluded by UK insurers


Dr Joanna Schubel
Magdalena Krzysztoporska

On 19 February 2021, the Senate (upper house) passed the Act amending the Act on Trading in Financial Instruments and Certain Other Acts (the "Act"), which introduces long-awaited rules for the run off of UK insurers' policies following Brexit.

Until now, whether or not these policies could be performed after 1 January 2021 raised huge legal questions. At the same time, however, the policies themselves remained valid and the UK’s withdrawal from the EU was neither a reason for termination of a policy, nor did it affect the insurer's obligation to make a contractual performance. On the one hand, this meant a stalemate situation for the UK insurers who did not want to sell their insurance portfolio / open a branch in Poland. On the other hand it effectively left insured persons without insurance protection.

According to the position of the Polish supervisory authority (KNF), it was not possible to continue servicing policies sold by insurers from the UK without obtaining a licence to conduct insurance activity in Poland (or in another EU Member State). This clearly violated the interests of insured persons in ensuring uninterrupted performance of ongoing insurance contracts, continuity of insurance coverage and the possibility of receiving performances due. And this where (as indicated in the explanatory memorandum to the Act) 12 insurance companies from the UK have not yet taken any steps enabling them to continue their operations in Poland.

This unfavourable situation will finally be changed by the Act, which lays down rules on the run off of insurance business conducted by the UK’s insurers. According to Article 8 of the Act, the performance of insurance contracts, reinsurance contracts and retrocession contracts concluded before 1 January 2021 in the territory of Poland (or concerning risks located in Poland) by an insurance/reinsurance company from the UK, Northern Ireland or Gibraltar, until expiration of claims under those contracts, will be governed by the provisions of Chapter 8 (right of establishment and the freedom for entities from EU Member States other than Poland to provide services) of the Act on Insurance and Reinsurance Activity and Article 173(1) and (2) thereof accordingly.

The article is authored by Joanna Schubel, Senior Associate and Magdalena Krzysztoporka, Senior Associate from DZP's insurance team. The remaining part of the article is available on the British-Polish Chamber of Commerce website.

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