It’s the morning after the night before… and after a shock vote that will see Britain leave the European Union, reaction has been flooding in from across the insurance industry. Here is a summary of the first round of comments as compiled by
Insurance Business UK.
British Insurance Brokers Association:
“This is an unprecedented situation for the UK and BIBA is conscious that this will create a considerable amount of work and concern amongst members and their customers.
“The process of negotiating exit terms, setting out future arrangements with the EU and creating trading deals is likely to take some considerable time and will impact our industry during that period. BIBA will work with the Government and other authorities to ensure that the interests of insurance brokers and their customers are fully represented in these vital negotiations. BIBA will make this a priority work stream during this time.”
Andrew Holderness, global head of corporate at Clyde & Co.:
“Insurers, reinsurers or intermediaries urgently need to review the scale of their operations from continental Europe into the UK, or vice versa, and determine what impact losing it might have on their overall balance sheet. If it’s critical, or if they want to continue writing it, they have a number of options; acquiring another business to provide the right platform, establishing a branch or subsidiary – or finding another business to front for them.
“If operations are marginal, there may well be value to be had from the sale of the renewal rights or a portfolio transfer.”
John Nelson, chairman of Lloyd’s:
“I am confident that Lloyd’s will stay at the centre of the global specialist insurance and reinsurance sector, and I look forward to continuing our valuable relationship with our European partners.
“For the next two years our business is unchanged.”
Paul Evans, Group CEO, AXA UK:
“It is far too early to say with any degree of certainty what impact the vote will have on our customers, our business and our employees in the UK. Following the outcome of the vote we will now monitor the coming withdrawal negotiations closely and will continue to support our customers and employees in the time ahead.”
Charles Portsmouth, director at Moore Stephens:
“Whilst some celebrate and some mourn, one thing is clear: there will be complications ahead.
“The reality is that a wholesale rollback of regulatory pressures originating from the EU is still unlikely. Major European-level initiatives such as Solvency II have already been incorporated into UK law; they are an integral part of the system in this country.
“Moreover, the UK as a whole and the insurance industry in particular are likely to want to retain access to EU market with a new trade deal. We are still part of a global economy and in order to preserve lucrative ties and be able to sell cross-border, UK-based insurers are likely to find they still have to comply with EU regulation. The future of our current EU passporting rights and their use by non-EU companies, through their London based European HQs, to access the EU market will be of prime concern to the insurance industry.
“In short, there are no simple answers to predicting what will happen. However, much EU legislation affecting the insurance industry is likely to be here to stay.”
David Gittings, CEO of the Lloyd’s Market Association:
“Lloyd’s underwriters have a well-earned reputation for being nimble and flexible in their business activities; they are well-placed to steer a course through these uncertainties and to take advantage of the resultant opportunities as they arise. The LMA will be monitoring developments closely and liaising with our members to ensure they are well supported and their views are represented over the months to come.”
Jonathan Howe, UK insurance leader at PwC:
“To answer the first question insurance companies will be asking - Solvency II will almost certainly remain - too much time, money and effort has been invested and the regulation is enshrined in UK Law. Additionally, the insurance industry should not expect significant dissolution of ‘cumbersome’ EU regulation, given the perception that the UK has a history of ‘gold plating’ insurance regulation.
“The Lloyd’s & London Market and General Insurance Market make extensive use of passporting. The loss of these rights could see insurers being forced to restructure and facing large operational, regulatory and tax costs as they adapt to such a change.
“Many non UK insurance companies from areas such as the USA and Asia currently use the UK as their European headquarters and as a ‘gateway’ into Europe through EU/EEA passporting. There is a real risk that these rights could be eliminated and insurers will be thinking about the best location for their bases in the future.”
Aviva Plc:
“Aviva plc (“Aviva”) notes the outcome of the UK referendum on EU membership. Aviva has conducted extensive analysis of the possible implications of a vote to leave the EU and considers it will have no significant operational impact on the company.
“Aviva’s operations in the UK and its other subsidiaries in the EU are well capitalised and continue to trade as normal. Aviva continues to be supervised by the PRA/FCA as lead regulator and Aviva’s European subsidiaries are incorporated and regulated locally and principally trade in their local market.
“At Aviva’s 2015 preliminary results, published in March 2016, Aviva reported a Solvency II ratio of 180 per cent and a surplus of £9.7 billion. Aviva has one of the strongest and most resilient balance sheets in the UK insurance sector with low sensitivity to market stress and over the last four years Aviva has tripled its economic capital surplus.
“Aviva will continue to monitor the technical implications of the vote to leave, which will only be resolved after several years of negotiating a new relationship between the UK and the EU.”
Related Links:
Insurance industry speaks out on Brexit result
