Lloyd’s: UK must remain in the EU
Lloyd’s chief risk officer & general counsel, Sean McGovern says that the UK remaining in the EU is in the best interests of the market.
Speaking to Lloyd's Market magazine, McGovern, who oversees legal, government and regulatory affairs and risk management for Lloyd’s says that that European business is very important to Lloyd’s and exit from the EU could result in a loss of business and a costly upheaval process.
Some 15 percent of premium income comes from the EU, excluding the UK, which McGovern says is “important to Lloyd’s”.
“We access EU countries using the fundamental freedoms of the Single Market, including the freedom to provide services cross-border and the freedom to establish in member states. We simply have to comply with the regulations of our Home State regulator in the UK,” he said.
According to Lloyd’s, if Britain were to leave the EU and be outside the Single Market, it would become a ‘third country’, which would result in the loss of Lloyd’s’ current automatic right to do business throughout the Union based on an EU passport. Instead it would have to negotiate new license arrangements with individual EU members, and “it is unlikely there would be any centralised process for this”, said McGovern.
“You normally can’t do business in a country without being established there, including holding some level of capital and reserves locally, and reporting and filing with the local regulator," he said.
McGovern says that the process of setting up in other EU Member States would mean a significant and costly upheaval for Lloyd’s and a period of uncertainty and disruption, possibly resulting in the loss of business.
“One can surmise that brokers, and clients of brokers, may find other carriers during that time, and there is a risk that, even if we could secure licenses, they may not return.”
McGovern also points out that such relationships already exist: “A number of businesses within Lloyd’s do have insurance companies outside the market and they may well choose to write insurance through another part of their group.”
