XL Catlin's London-based insurance business has introduced a contract continuity clause addressing the risk that contracts written by XL Catlin's London-based entities prior to Brexit may become impermissible assuming passporting rights are lost as a consequence of the United Kingdom leaving the European Union.
In a statement, XL Catlin said that the clause was intended to be included in insurance policies written by Catlin Insurance Company (UK) Ltd ("CICLUK") and XL Catlin's Syndicate 2003 at Lloyd's. These two entities will remain in the U.K. after XL Insurance Company SE ("XLICSE") – the main insurance company platform for XL Group within Europe and Asia – moves to Dublin, Ireland, subject to regulatory approvals.
According to XL Catlin, the clause mirrors standard London Market continuity clauses, with some key differences:
- The clause makes XLICSE an additional party to the policy from inception as a contingent insurer with the aim of providing continuity of cover for clients.
- If post Brexit a policy's performance becomes impermissible in whole or in part and cannot be amended to enable CICLUK or Syndicate 2003 to perform it permissibly, XLICSE (assuming that XLICSE has moved to Dublin within the time period expected) will automatically be contractually obliged to perform it or any part of it, assuming it can do so permissibly.
- If XLICSE cannot perform the policy, only then is it automatically cancelled with a pro-rata return of premium (subject to no claims having been notified).
Commenting, Paul Greensmith, U.K. country leader and director of the London Market wholesale business for XL Catlin, said, "Our innovative clause offers significant advantage by minimizing the risk that policies will be cancelled, by making XLICSE a contingent party to the policy. Effectively, XLICSE will act as a back-up. A political solution may yet be forthcoming that ensures polices can be performed post Brexit, but in the absence of one we believe this clause gives our clients and brokers the certainty they expect and deserve from their insurance partner."