Existing framework for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.

On a global level, numerous WTO members make commitments in line with the WTO’s Understanding on Commitments in Financial Services18 allowing certain specialist products such as marine insurance, aviation insurance, goods in transitinsurance and reinsurance cover to be sold cross-border. However, several EU Member States have reservations in these sub-sectors19. Similar commitments (and reservations) are also contained in some bilateral and regional trade agreements. In certain countries, including some EU member states, these have been supplemented in practice by national exemption regimes, which permit further cross-border trade in limited circumstances, such as in relation to sophisticated counterparties.

The EU has also established bilateral agreements for non-life insurance with Switzerland and for certain types of (re)insurance with the US. The EU-US “Covered Agreement”, as it is called, is an example of an agreement entered into under Article 175 of Solvency II (mentioned above). Under specified conditions it eliminates local presence requirements, collateral requirements; enables group supervision to be conducted solely by the group home supervisor; and sets out mutual support for the exchange of information between supervisory authorities. The EU-Switzerland agreement on direct insurance other than life assurance21 broadly enables direct general insurers to establish a branch in EU member states, but does not give passporting rights across the EU as a whole.

More widely in financial services, there are well-developed principles at the international level which seek to support cross-border activity and avoid duplicative regulation and fragmentation.