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A new report addressing the “significant uncertainty” around the ability of intermediaries to place and service European risk from the UK post-Brexit has been launched today.
The research, conducted by the London and International Insurance Brokers’ Association (LIIBA) and consultancy EY, looks at the regulation for intermediaries and the authorisation process in 10 of the key countries in the EU.
So far, the spotlight has been on the decisions of underwriting firms as to how they will navigate a post-Brexit marketplace, but the broking industry faces “major challenges,” Christopher Croft, CEO of LIIBA, said in a statement.
“We are working closely with members to help them make the right contingency plan to protect the interests of their clients. That may require them to create a subsidiary entity in EU. This report will help them choose the most appropriate location for that entity,” he said.
“We all know that there needs to be a solution found for contract continuity – so that clients with policies in play as the UK leaves the EU are not disadvantaged. We support the call from the CEO of the FCA for a single, official solution to this, rather than leaving firms to fend for themselves. But we also need to ensure that the flow of business into London can continue whatever the outcome of the negotiations. This report will support our members’ plans to achieve that.”
EY’s UK insurance Brexit leader Benedict Reid said that brokers have a “fundamental role” to play in maintaining client service and insurance trade flows between the EU27 and the UK post-Brexit.
“This should be front of mind for brokers. It is essential that Brexit plans are connected across the entire value chain – from client to broker to insurer and reinsurer – to avoid a situation where business cannot be placed with newly-authorised underwriting entities,” Reid said.
He continued: “If brokers do not move with pace, they risk not being ready to trade with underwriters’ new entities, which could result in disruption to their clients, their trading partners and their own businesses.
“As underwriting firms continue to develop their Brexit plans, brokers should expect significant volumes of communication which will enable them to align with new models, and for their clients to be transferred to a new European or UK legal entity if required. Time is now very short for those brokers who need to develop their plans for authorisation to continue trading cross-border with the EU27.”
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