Posted on: 24 June 2016
The London insurance market is resilient and well-positioned to respond to the result of the referendum on the UK’s membership of the EU, the International Underwriting Association (IUA) has stated.
Insurers have been preparing for the possibility of a vote to leave and considering how to adapt their business plans in response to new trading conditions. There will now be an extended period of negotiation to determine the exact terms upon which the UK exits the EU. The role of financial services must form a key part of any discussions about a new trading relationship between the UK and the remaining EU member states.
Dave Matcham, chief executive of the IUA, said: “Clearly the UK’s decision to exit the EU presents challenges for London Market companies and uncertainty surrounding the potentially prolonged nature of this process will be problematic for future planning. Our industry is, however, experienced in responding to change.
“The free trade benefits of EU membership have been vital in maintaining London’s position as a global insurance hub and are highly valued by IUA members. This is true both for insurers headquartered in the UK and those international firms that use London as their centre for European business.
“We know that many companies will now be considering their own individual responses. Continued access to European markets is essential and will, I expect, be at the forefront of the process to respond to the referendum decision. The IUA will be working with the London Market Group to ensure our industry’s views are fully represented as developments continue.”
Regulations governing the conduct of insurance business in the UK have been established in the context of EU membership. The UK was instrumental in developing Solvency II which is an evolution of its own predecessor system. For London Market companies conducting European business, the maintenance of regulatory equivalence will be important.
Mr Matcham added: “The IUA’s own research shows that more than 20% of our members’ premium income comes from continental European markets. Insurance is almost by definition an international business and in order for it to operate efficiently regulatory developments are pursued at an international level.
“Outside the EU it will still be desirable for UK supervisors to have reciprocal arrangements in place with other national regulators. Otherwise we will see a duplication of compliance costs that will damage companies and escalate costs for clients.”
