The Chief Executive of the London and International Insurance Brokers Association (LIIBA), Christopher Croft, has told insurance brokers that the key challenge facing them post-brexit remains the uncertainty around the proposed models for brokers to maintain access to London for European risks.
Speaking at a joint LIIBA-Lloyd’s brexit seminar Croft said that, while recent unconfirmed reports hinting at a UK-European Union financial services deal are positive, the lack of clarity around the Insurance Distribution Directive (IDD) mean that, to date, no EU regulator had confirmed a belief that a wholesale broking model would be acceptable.
Croft explained that most regulators are expecting EIOPA to provide clarity for brokers but that the current understanding is EIOPA does not intend to so.
This is because, Croft said, the scope of IDD is a matter for the European Commission. However, the commission is unlikely to do anything that could be seen to be prejudicing the negotiations.
“These as yet unconfirmed reports that an agreement on market access has been reached are a positive sign – and mirror messages we are getting from both sides of the negotiation,” said Croft.
“But if, as reported, the deal is based on regulatory equivalence we await the detail of how this will cater for insurance intermediation where no such concept exists.”
“We are however hopeful as this challenge was acknowledged by government when John Glen responded on behalf of the Prime Minister to LIIBA’s letter on the subject,” he added.
In order to put the matter before the commission, Croft asked brokers to keep the London market and its representative bodies appraised of their plans and to continue working closely with the Corporation of Lloyd’s.
On a related note, Croft said he had learned that the German Insurance Buyers’ Association had raised with the German government the need to access London post-brexit.
“Our message to politicians remains twofold: we need a political solution to contract certainty and we need EU clients to retain access to London post-Brexit,” Croft added. “It’s a message we believe is now resonating in some important areas.”
Croft’s cautious approach to the rumoured financial agreement, that would give UK firms access to European markets as long as British financial regulation remained broadly aligned to that of the EU, echoes that of Jennette Newman, Partner, Clyde & Co and President of London FOIL (Forum of Insurance Lawyers).
Responding to the unconfirmed media reports today Newman said, “Reports that the UK is closing in on a Brexit deal for services are very welcome. However, the devil will be in the detail and at this point we still have very little information to work with.”
“The London insurance market has been very clear all along that a deal based on the equivalence concept will not cut it, either for underwriters or particularly for brokers.”
She continued, “If that’s what’s on the table it will be disappointing for the industry and a real set back in terms of our ability to play a leading role on the global stage.”
