After months of uncertainty, the insurance industry is being warned to take cover and prepare for the potential of a no-deal Brexit as it comes to terms with the fading dream of mutual market access.
This week, the London & International Insurance Brokers’ Association (LIIBA) said in its mid-year report that the possibility of the UK leaving the EU with no trade nor transition agreement in place in March 2019 “is higher than it was previously.”
The association’s chief executive Christopher Croft warned members that it would be “foolish to ignore the very real possibility” of no-deal for the UK, and urged them to consider how they will continue to service EU clients’ needs. The chief executive also described the concept of mutual market access as looking to be “dead in the water.”
The release earlier this month of the government’s Brexit whitepaper confirmed a goods-only free trade proposal, leaving the UK insurance market disappointed at the absence of mutual market access.
Commenting on the whitepaper, the London Market Group (LMG) said it was disappointed that its “request for a bespoke arrangement delivering mutual market access” was not part of the government’s vision, but added it understood the difficulty of achieving this in the time remaining for an agreement.
At an event in London prior to the release of the whitepaper, LMG’s chief executive Chris Beazley described ensuring a competitive business environment for the UK as “incredibly important to the future success of the London insurance market.”
More than €9 billion (£8 billion) of premium is brought to the London market annually on behalf of EU clients and almost €7 billion (£6.2 billion) of international business is written in London by firms with a parent company or principal base located elsewhere in the EU, Beazley said.
“[The UK and EU] are important partners to one another, and we hope that our partnership with the EU can be allowed to endure and grow, and that we can continue to play a role in supporting EU business and facilitating the flow of trade and commerce across the EU,” the chief executive said.
But the market’s Brexit woes look set to roll on. Consultancy EY has this week warned that Brexit plans are likely to be a key focus for the market as reporting season approaches, “particularly in the wake of the government’s recent White Paper, which officially removed mutual recognition from the next round of negotiations.”
“While many UK headquartered insurers are advanced in their Brexit activity, more action is needed to ensure intermediary plans are developed and connected in parallel to ensure there is no interruption to trade flows between the EU27 and UK in the event of a “no deal” scenario,” EY’s UK insurance leader Rodney Bonnard said in a statement.
