Prior to last year’s momentous vote on the UK’s membership of the EU, the IUA played an active part in the referendum debate. Participating in industry roundtable discussions and issuing media statements, we described the single market benefits that allow our members to trade freely across the continent without duplicative compliance burdens and unnecessary capital restrictions.
Since the decision was taken for the UK to leave the EU, our focus has been on ensuring that as many of these advantages as possible are preserved in any future trade agreement between the two sides. Throughout the process we have consulted closely with member companies, surveying their views before the referendum and afterwards establishing a Brexit working party to coordinate activity.
Much of the IUA’s work representing member interests to Government has been conducted in partnership with Lloyd’s and brokers through the London Market Group (LMG). Indeed, well before the EU referendum a programme of work was already in place here to raise our industry’s profile generally within Westminster and Whitehall. We were ideally placed to express our views, therefore, and in the days after the Brexit decision was taken, pre-scheduled meetings were utilised to discuss insurer concerns. The London Market Group quickly published a paper outlining recommended actions for the Government to take in response to the referendum result.
An important part of our strategy has been to illustrate clearly the impact of no trade deal being struck between the UK and EU. Some reports have suggested that, since retail and life policies are generally purchased from national carriers and not cross-border, insurance is an industry unlikely to be heavily impacted by Brexit. This is not true for the London Market which contributes substantially to the UK economy, trading largely internationally in wholesale specialty risks and in reinsurance that local markets do not have the expertise or capacity to cover.
In October, we consequently published our annual London Company Market Statistics Report with an additional Brexit chapter identifying premium of £7.3bn that will potentially be directly affected by a change in rules governing UK participation in the EU single market and its financial services passport regime. This total comprises £1.4bn of income generated by companies accessing EU business from London and £5.9bn from continental European firms writing international business via a branch in the London Market. These statistics have been used to demonstrate the important reciprocal nature of European trading arrangements that must be maintained in order to preserve London’s status as a global insurance and reinsurance hub.
Since the decision was taken for the UK to leave the EU, our focus has been on ensuring that as many of these advantages as possible are preserved in any future trade agreement between the two sides.
IUA Working Party
Members of the IUA’s Legal and Regulatory Committee established a working party to consider the association’s input into the Brexit process. In November the group produced a paper identifying four priority areas for negotiation with remaining EU states. These objectives covered access to the single market, legal considerations, tax issues and uncertainty around the implementation process.
The working party has also considered priorities for potential post-Brexit bilateral trade deals with other regions of the world. In January it responded to a consultation exercise by the Treasury Select Committee on the importance of arrangements to manage the process between the UK leaving the EU and any new agreement governing economic relations coming into effect.
Shortly before the triggering of Article 50 to launch the Brexit process, the LMG published detailed and updated recommendations to the UK Government. A roadmap document set out the following issues for resolution: confirmation of regulatory equivalence under Solvency II between the UK and EU; establishment of a right for UK re/ insurers to have unimpeded access to the EU market and
a reciprocal right for EU companies to do business in the London Market; early agreement of an implementation period with market access rights.
An official launch was attended by Stephen Hammond MP and the roadmap received widespread coverage. Our representational work on this important issue has ensured that the concerns of IUA members are well understood by politicians and officials now negotiating the terms of the UK’s future trading relationship with the EU.
Indeed, the Department for Exiting the EU requested that an LMG Brexit taskforce be established to allow consultation between the Government and our market as negotiations proceed. The IUA is well represented on this group which is chaired by IUA Chairman Malcolm Newman.
As the deadline for leaving the EU approaches, companies will consider their own individual contingency plans in order to ensure continued client service. The IUA will of, course, continue to lobby for an outcome that best enables a continuation of cross-border insurance business and keep members up to date on progress via our monthly newsletter and a dedicated Brexit page on the IUA website.