The Chairman of Lloyd’s Bruce Carnegie-Brown has said that the Corporation welcomes the Bank of England’s newly published guidance on its approach to the supervision of international insurers, as well as to branch authorisation and supervision in a post-Brexit world.
The Bank of England’s Prudential Regulation Authority (PRA) unit has provided new guidance that could bolster the ability for London’s insurance and reinsurance market to maintain greater business continuity when the United Kingdom has finally exited the European Union.
“Keeping the UK’s financial system open to foreign institutions is in the best interests of the UK, EU and global economies,” the Bank of England said.
The PRA explained in a consultation document, “The proposals are relevant to all existing and prospective insurance firms carrying out regulated activities, but not headquartered, in the United Kingdom that are not able to benefit from passporting rights. The PRA’s approach to branch supervision for EEA firms that are currently branching into the United Kingdom under the passporting arrangements remains unchanged until the United Kingdom withdraws from the European Union. They would then be treated in the same way as other insurance branches. ”
The idea is to create a smoother transition, from pre-Brexit to post-Brexit by stating how international insurers and reinsurers will be treated, how branches will be regulated (versus subsidiaries) and how third-country market participants can expect to do business in the UK and with it.
The guidance hinges on there still being a good degree of cooperation between the UK and the EU and the PRA did note that its guidance is dependent on the outcome of Brexit negotiations.
Bruce Carnegie-Brown, Chairman of Lloyd’s, commented, “We welcome the government’s proactive approach to the supervision of international insurers, which, if applied, would help the continuity of business through the post-Brexit implementation period.
“This will provide greater certainty to insurers and UK policyholders, reinforcing London’s position as the world’s leading insurance centre. This is a very positive development, which will contribute to financial stability to the benefit of all parties in the insurance sector.”
