The London Market Group (LMG), an independent UK and London insurance and reinsurance market lobby group, has called for the UK government to assure regulatory equivalence is maintained after Brexit and that a new trade deal is secured with the EU.
The LMG has published a report full of recommendations for the UK Government to consider in its Brexit negotiations, aiming to assure as much continuity for the London insurance and reinsurance market as possible.
Already re/insurers are establishing new offices in EU domiciles, as they prepare for the impact of a potentially protracted Brexit negotiation. The LMG wants to head off as much impact to the London market as possible, by making clear the key issues faced by re/insurers as the UK plans its exit from the EU market.
Key to the re/insurance market in London are maintaining regulatory equivalence, and the group calls for the UK Government and EU to provide a guarantee that this will remain the case after Brexit.
A new trade deal arrangement with the entire EU economic area is also seen as key, giving UK brokers, insurers and reinsurers the rights to continue operating across EU borders.
Also of note is the need for an implementation period and an early agreement on this, providing re/insurers a chance to prepare for the implementation of Brexit and avoiding a “cliff edge” on the day that the UK exits the EU.
Nicolas Aubert, Chairman of the LMG, said; “Since before the referendum LMG has focused on building important relationships with Government and we appreciate their willingness to develop an ongoing dialogue. As a result of these discussions they understand that a new deal is critical. Over £8billion of EU business comes to London. So, we are continuing to work closely with the Government to see where there are existing precedents in current international agreements which could be used for the Brexit negotiations to support our industry.
“While these alone will not be enough, they are a good place to start and could provide elements that deliver significant advantages to both UK and EU insurers, reinsurers and brokers. This is crucial as it is not legally possible to write EU business from the UK under WTO Rules.”
The LMG also urges that the regulatory environment should be reviewed, to ensure that the UK does not fall at a disadvantage after Brexit and that the London insurance and reinsurance market can operate on a level playing field.
Nicolas Aubert continued “Our competitor hubs in Bermuda, Dubai, Singapore and Zurich have regulators with duties to actively support the promotion of their local insurance markets. The FCA and PRA do not have such objectives and we think there would be value in giving them a balancing statutory objective to consider the impact of their actions on the competitiveness of the financial services sector. We would also like to see the creation of a dedicated inward investment unit in the Bank of England to support and encourage new entrants to the UK as well as retain those currently present through the implementation of the new agreement. This would ensure that our regulators maintain a day-to-day focus on helping to maintain London as the global centre for specialty commercial insurance and reinsurance.
“We are right at the start of the negotiations and we are optimistic about what can be achieved. We welcome the Government’s desire to work collaboratively with the industry to get the very best deal for the London Market and the UK economy.”
