International law firm Kennedys has warned of a nightmare no-deal scenario should the UK government fail to break the current political deadlock, whilst defining six areas it believes are key to safeguarding future investment, talent and innovation in the insurance industry.
In a report based on interviews with senior industry figures, Kennedys’ Head of Corporate and Public Affairs Deborah Newberry called on the government to be “Bolder in batting for Britain’s insurance and financial services sector, given the sector’s contribution to the UK economy.”
“Our report clearly highlights a gulf between the type of brexit which the insurance industry favours and the UK Government’s recent White Paper.”
“Industry leaders do not favour the decision to abandon discussions on mutual recognition for services before the negotiations have even started.”
Newberry goes on to describe the proposed December 2020 transition period as an “opportunity for common sense to prevail while the UK and EU forge a new trading relationship.”
A common concern amongst respondents featured in the report was the prospect of an enhanced equivalence model for accessing the single market, described as a “soft brexit on goods and agriculture and a hard brexit on Services and the City of London.”
The report also discusses various options for a future EU-UK trade relationship, including those favoured by insurance executives – all of whom agreed that more work is required in the development of any future equivalence regime.
In order to secure the insurance industry Kennedys believes that the UK should aim for flexibility around its exit date, define ‘best third country’ status, protect workers’ rights, resolve the uncertainty surrounding its exit, protect investment in research and development, and not become a “rule-taker”.
“Our six recommendations address the key concerns among insurers including the red lines for the industry,” added Newberry.
“If the industry is to retain its significant market shares in key industries – 60% in global aviation insurance, 52% in energy and 33% in marine insurance, to name but a few – it is imperative for the UK Government to listen to the industry and protect its interests.”
“The UK Insurance sector is a global success story. It provides employment for over 330,000 people, as well as helping many millions of businesses and householders to protect their lives and properties against everyday risks.”
“With an export market worth £20bn annually, it is important that the UK sector maintains favourable single market access after Brexit. The insurance industry needs a significant voice in shaping the priorities for a future UK-EU relationship.”
Richard West, Partner and Head of Innovation, Kennedys, said, “Long term innovation in the insurance industry must also be safeguarded. This is core to maintaining the UK market’s leading position in established classes, as well as growth areas such as FinTech, InsurTech and RegTech.”
“Our report outlines some key considerations including R&D, regional funding, data protection and the free movement of people which must be given greater focus.”
