Carriers must assess risk of losing passporting rights
If UK insurers lose passporting rights as a result of the country’s exit from the European Union, they must develop the right solutions to manage the related risks going forward, Paul Latarche, director of Moore Stephens, told Monte Carlo Today.
“Uncertainty is never good in any market, so insurers are pushing very hard to get early indicators—which is good,” Latarche said.
He suggested that a lot of businesses may consider forming operations in Europe. “We are being asked to look at jurisdictions for some of our clients,” he said.
Moore Stephens is helping carriers and clients review their operations now to analyse the impacts of different jurisdictions and their tax structures.
“Once we’ve collated those views, having done a lot of consultancy work, it will be good to sit down with someone and say: ‘here are the common themes that everyone is worried about and here are the associated risks’,” said Latarche.
“In a few weeks’ time we’ll have quite a lot of knowledge on where insurers are with it.”
Latarche added there is a huge amount of uncertainty regarding how Brexit might pan out, but clients must consider the risk of passporting rights being lost and the implications of that.
Passporting works both ways. “If you are a Luxembourg-based insurer and Brexit affects passporting rights, you will not have a licence to write UK-domiciled risks,” he said.
He also suggested that Bermuda, which now benefits from Solvency II equivalence, might be looked upon more favourably as insurers see it as a safe haven with access into the single market.
“It’s definitely one of the options, but I think it’s more likely that people will choose a domicile that’s in the EU,” Latarche said.
Commenting on the idea that Lloyd’s may form an operation in Europe, Latarche said he imagined this could form part of a solution but also warned that the market needed to maintain its deep London presence.
“The Lloyd’s market has probably been through harder times but London has to be careful—it needs to make sure it remains the intellectual capital of underwriting, and I think technology has a big part to play in that,” he said.
