Following yesterday’s crushing parliamentary defeat, in which Prime Minister Theresa May’s EU withdrawal agreement was rejected by MPs by more than 200 votes, uncertainty remains for the London insurance and reinsurance industry.
The PM’s withdrawal agreement was rejected by 432 votes to 202, and with the government facing a vote of no confidence, the ongoing confusion surrounding Brexit continues to drive uncertainty across the London insurance and reinsurance market.
Commenting on last night’s vote, Chief Executive Officer (CEO) of the London Market Group (LMG), Clare Lebecq, said: “From the London Market’s perspective, yesterday’s vote simply extends the period of uncertainty for everyone, an uncertainty that is deeply unhelpful for the re/insurance industry as it works to serve our EU clients who rely on the expertise and capital of the London Market to protect their most complex risks.”
Huw Evans, Director General of the Association of British Insurers (ABI), also warned of a period of unprecedented uncertainty following the Government’s defeat, urging for a way forward that avoids no-deal.
“It is critical that the Government, Parliament and the EU work together to avoid an outcome that would be bad for our economies and bad for our customers,” he added.
The ongoing uncertainty surrounding Brexit is a challenge for all businesses, and especially in the financial services sector. Numerous UK insurers, reinsurers, and brokers have taken steps to ensure continuity for clients whatever the brexit outcome, something highlighted by Lebecq.
“Firms have done all they can do to prepare for 29 March, and most have executed their contingency plans, but the lack of clarity on some key issues means that a transition period is critical. The LMG is continuing to work with MPs and the government to ensure those needs are clearly understood,” she said.
Despite all the uncertainty, the proactive response and efforts of the London insurance and reinsurance community has been encouraging to see, and this was also noted by Jennette Newman, Partner at Clyde & Co and President of London’s Forum of Insurance Lawyers (FOIL).
“The London Market insurance community has in many ways led the way in being prepared for all Brexit eventualities and has played to its strengths as a unique environment for covering risk. Notwithstanding remaining issues around contract certainty in some jurisdictions in the event of no deal, I am confident that it will continue to provide vital insurance and reinsurance business in the EU, even if that will be made harder by Brexit.
“The situation with the broking community is more complicated due to the equivalence rules – but negotiations continue with the EU, and it is envisaged a pragmatic solution will be agreed before the 29th March as no continuity is in no one’s interests.
“Even if the deal had passed, our future long term relationship with the EU remains unclear and will be subject to protracted negotiations. The London Market can’t and won’t wait for absolute clarity and needs to use Brexit as an opportunity to focus without distraction on some of the broader systemic changes in the sector,” said Newman.
Adding: “It must redouble its modernisation efforts to ensure it’s as efficient an insurance centre as possible, continue to place itself at the heart of the innovation taking place in the sector, and appeal to a more diverse talent base that will provide the broad range of new skills that will be needed in the insurance sector in the next ten to twenty years.”
