As widespread and seemingly growing uncertainty remains around the UK’s vote to leave the European Union (EU), insurers and reinsurers in the country have stepped up their post-Brexit plans in an effort to ensure continuity for clients, reports A.M. Best.
The outcome of the UK’s Brexit vote remains very uncertain for many industries, including the extremely important financial services sector. But amid the confusion and severe lack of clarity, UK insurers and reinsurers have ramped up their efforts to ensure continuity for clients post-Brexit, establishing EU subsidiaries in various, remaining EU member states.
In a recent briefing, global ratings agency A.M. Best has commented on the efforts of UK re/insurers to put in place arrangements that enable them to continue to serve their clients in the other 27 EU countries post-Brexit.
“The ability to continue to conduct cross-border business is a particular concern for Lloyd’s, the London market and other UK-based commercial insurers. It is less of an issue for retail insurers as they principally underwrite domestic business,” says A.M. Best.
The ratings agency states that ongoing uncertainty about what a future UK – EU trade deal might look like, has seen companies accelerate their efforts to launch EU subsidiaries.
The new subsidiaries, which have been launched by a growing number of UK insurers and reinsurers, ensure that companies can underwrite EU business after March, 2019.
Furthermore, it remains unclear if UK companies that utilise passporting rights are able to service claims on existing EU policies after Brexit, which has led firms to explore the costly avenue of transferring existing EU business to their new EU subsidiaries, says A.M. Best.
The specialist Lloyd’s of London insurance and reinsurance marketplace, and the broader London market, is extremely valuable to the UK’s economy, so it’s not too surprising that a number of industry experts and executives have questioned the government’s continued lack of clarity regarding post-Brexit operations of much of the country’s financial services sector.
John Nelson, former Chairman of Lloyd’s, said recently that UK businesses must voice their concerns about the trade implications of Brexit, and argued that the country is dangerously unprepared for its split with the EU.
While the Chief Executive Officer (CEO) of insurance and reinsurance broker JLT Group, Dominic Burke, told Reuters recently that the firm was preparing for a no-deal Brexit, which, suggests a lack of confidence in the country’s ability to get everything in order by March, 2019.
The London Insurance and International Brokers Association (LIIBA) voiced a similar message recently, telling its members to prepare for a no-deal Brexit.
The list of organisations and executives expressing concern over the lack of clarity surrounding Brexit goes on, and will likely continue to grow alongside the establishment of EU domiciled subsidiaries as the expected Brexit deadline fast-approaches, and widespread uncertainty remains.