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Activities in Denmark from UK based insurance undertakings after Brexit


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If the EU and the UK does not succeed in reaching an agreement on the future relationship between the UK and the EU, including cross border financial services, by the end of 2020, UK based insurance undertakings will not be allowed to continue doing business in Denmark after 1 January 2021. In that case, the Danish Financial Supervisory Authority (hereinafter the DFSA) intends to issue an executive order, which will grant a temporary permission for undertakings already notified in Denmark to let existing contracts run off.

The United Kingdom (UK) and Gibraltar formally left the EU as of 31 January 2020 and are now in a transitional period with the purpose of negotiating an agreement with the EU on the future relationship between the two.

The transitional period is due to operate until 31 December 2020 and until then EU law will continue to apply in the UK and Gibraltar.

If the two parties do not reach an agreement during the transition period, the UK and Gibraltar will no longer be encompassed by EU law as of 1 January 2021. Among other things, this will imply that the freedom for trade (establishment and providing services) will no longer be available to UK an Gibraltar insurance undertakings.

One of the consequences for the insurance sector will be that according to Danish law insurance undertakings with their head office in the UK or Gibraltar, who have entered insurance contracts for risks situated in Denmark, will no longer be allowed to conduct insurance business in Denmark, including to service existing cross-border business.

Since the spring of 2019, the DFSA has been in dialogue with both Danish and British insurance undertakings informing them of the consequences of a possible Brexit without an agreement for the future relationship between the EU and the UK, the options available for preparing for this scenario and the importance of preparing.

UK insurance undertakings and Danish insurance holders:

Come 1 January 2021 it is expected that some UK insurance undertakings will still be holding portfolios covering risks in Denmark. To ensure that Danish insurance holders are not suddenly left without coverage, the DFSA intends to issue an executive order granting a temporary permission to continue servicing existing insurance contracts until the end of 2021.

The executive order will apply to UK and Gibraltar based insurance undertakings notified to pursue insurance business in Denmark before 31 December 2020, and it will grant them a temporary permission to continue servicing insurance contract entered into before the end of 2020, provided that the undertaking meets the requirements stated in the executive order, including reporting to the DFSA.

Insurance undertakings can continue to service contracts in run-off, but are not allowed to extend existing contracts or enter new ones.

Danish insurance holders are encouraged to take the necessary steps to ensure that they have the required coverage, for example by finding another insurance undertaking to provide new insurances, when the existing contracts expire.

Undertakings covered by the executive order will also be subject to the Executive Order on Good Business Practice for Insurance Mediators, the Executive Order on Fees and Other Costs for Insurance Undertaking, and for undertakings that service life insurance agreements, the rules of in the Executive Order on Information About Life Insurance Agreements also apply. As of 1 January 2021 the insurance contracts will, however, not be covered by the Danish Guarantee Fund for Non-life Insurers.

The draft executive order was sent into public hearing on 12 March 2019. The consultation letter and the draft are accessible at hø, though only in Danish. Please note that the date of entry into force stated in the draft will be changed to 1 January 2021, and that the executive order will apply to undertakings notified to cover insurance business in Denmark by 31 December 2020.

The DFSA will continuously assess whether an extension of the executive order is required.

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Regulator Information

Abbreviation: DFSA
Jurisdiction: Denmark

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