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Ireland is the most attractive location for insurers seeking to create a unit within the EU to retain access to the common market after the Brexit vote, according to a survey conducted by Intelligent Insurer.
Insurers operating in London’s international insurance hub are worried that they may lose their passporting rights to operate in the EU after Brexit. The passporting mechanism provides a company authorised in one member state the ability to conduct cross-border business without being required to apply for any additional authorisation or hold assets locally. Insurers are therefore seeking to create a subsidiary in an EU country, if they don’t already have one, to secure access to the EU market.
Ireland received 32 percent of votes from Intelligent Insurer readers and was therefore selected the best location to set up an EU subsidiary. Among reasons presented by participants were the cultural and geographical proximity to the UK and London, particularly the shared language. Some participants also mentioned the legal system and praised the existing regulatory framework as an advantage of the location.
Karl Wall, chairman and CEO of Florida-based Aylesbury Insurance Services noted Ireland’s good infrastructure and corporate tax rate.
The chief financial officer of Atradius Re, Niamh Derivan, mentioned the long-standing close ties with the UK as an advantage of Ireland as a location as it means that even post-Brexit, work permits are unlikely to be an issue as he expects that there will be a “special trade deal” between the UK and Ireland after Brexit.
Other participants in the survey mentioned the availability of qualified workforce in Ireland.
Lloyd's of London insurer Beazley is among the companies which have selected Ireland as their EU hub. Beazley is hiring additional staff in the country to establish a European insurance company in Dublin after the Brexit vote, its chief executive said in February.
Ireland has, however, recently lost out to other jurisdiction in the run for hosting for example AIG’s and Lloyd’s EU subsidiaries.
Germany was the second most preferred location for insurers seeking to secure access to the EU market after Brexit with 13 percent of votes. Readers praised the infrastructure in the country and the regulator. In addition, readers mentioned the size of the country’s re/insurance market as well as the large players based there. Germany is home to major insurer Allianz for example, as well as Munich Re and Hannover Re. Readers also mentioned the political and economic stability of the country as an advantage for Germany as a location for insurers.
Manfred Seitz, managing director, reinsurance international at Berkshire Hathaway pointed to the fact that Germany is Europe’s largest economy, that it is an attractive location for expats and that it holds a large talent pool.
Belgium followed Germany closely as the industry’s preferred location with 12 percent of votes.
Executives participating in the survey mentioned the country’s central location in the EU and its diverse culture and language pool. In addition, the capital Brussels is the political centre of the EU, offering close relations to the core decision-makers in regulation and compliance. Furthermore, Brussels is well connected to London via the Eurostar fast-speed train.
A lawyer participating in the survey pointed to the multilingual access to regulatory bodies that Belgium offers, its “excellent relocation offering, infrastructure and logistics/travel facilities.”
Brussels has recently been picked as the location for Lloyd’s EU subsidiary. “Brussels met the critical elements of providing a robust regulatory framework in a central European location,” Lloyd’s CEO Inga Beale explained the decision.
The next best location according to the survey is Luxembourg with 10 percent of votes.
Readers pointed to the country’s favourable geographical positioning, the fiscal structure, availability of skilled employees, stable financial and political institutions and the lobbying capabilities it offers. An executive noted the “excellent” business culture and a stable tax environment as advantages of Luxembourg as an insurance location.
Another reader noted that Luxembourg has the advantage of a “pragmatic and approachable regulator who has experience of dealing with large and complex insurance groups,” as well as good connections to London while being a central location to other EU insurance hubs.
Luxembourg’s regulator has been praised by another executive, who pointed to the possibility to communicate with the regulator and file returns in four different languages.
Similar arguments may have convinced US insurance giant AIG to set up a subsidiary in Luxembourg.
Currently, AIG writes business in Europe from a single insurance company based in the UK, which has branches across the EEA and Switzerland.
Anthony Baldwin, CEO of AIG Europe, said in March: "Luxembourg, a founding member of the European Union, offers us a secure location in a stable economy with an experienced and well-respected regulator in continental Europe close to many of our major markets."
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Brexit, UK, Europe, Insurance, Lloyd's, AIG, Beazley, Inga Beale, Anthony Baldwin