Widespread uncertainty remains, but despite the UK’s vote to leave the European Union (EU), global ratings agency A.M. Best expects London to maintain its status as one of the world’s leading insurance and reinsurance hubs.
In response to the UK’s Brexit vote, a number of insurers and reinsurers have announced plans to establish a subsidiary in a remaining EU country in order to continue to access and conduct business. A.M. Best highlights Ireland, Luxembourg, and Belgium as the primary locations of choice as they develop post-Brexit contingency plans.
But despite the move by some to establish new branches outside of the London and broader UK marketplace, A.M. Best believes that London will remain a global hub for re/insurance business.
“While it’s very early days, A.M. Best expects that London will retain its status as one of the world’s leading insurance centres and an important insurance hub, given its pool of underwriting talent and reputation for flexible underwriting.
“London has attracted talent and expertise from around the world, and is innovative, leading the development of new product lines such as cyber insurance. Since 2015, the government has also taken steps to increase the attractiveness of London as a domicile for insurance-linked securities (ILS),” explains A.M. Best, in a recent note on the establishment of new EU offices.
Despite the optimism, A.M. Best does warn that the long-term impact of Brexit on the country’s insurance and reinsurance industry will be subject to trade deal negotiations, which may or may not be beneficial to the UK marketplace.
Companies established in the UK will also no longer be directly subject to Solvency II regulation, but A.M. Best predicts the UK to both seek and gain equivalency status post-Brexit.
“Much uncertainty remains, with key issues surrounding Brexit that need to be addressed through 2017 including the shape of future insurance regulation, how to maintain access to EU business and talent, and the potential transfer of business,” explains A.M. Best.