Re/insurers likely to pursue EU access as uncertainty remains post Brexit speech
While UK Prime Minister Theresa May offered insight into her strategy for the Brexit negotiations, she has failed to produce the clarity re/insurers in the UK require to ensure continuity of their operations in mainland Europe – and many will pursue their own strategies to ensure access as a result.
In a long awaited speech on Tuesday January 17, May said that the UK "cannot possibly" remain within the European single market.
She promised, however, to push for the "greatest possible" access to the single market following Brexit. Priorities in the negotiations include a tariff-free trade and a customs agreement with the EU.
“Whatever the precise outcome of negotiations, insurers won't wait-and-see. Planning for Britain's exit from the EU is well underway as insurance carriers believe they need to take concrete steps for all eventualities by setting up carrier companies in EU27 countries,” said Ivor Edwards, corporate insurance partner at law firm Clyde & Co.
The re/insurance sector in the UK has been particularly worried about the possibility of losing its passporting rights. The 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.
The Chartered Insurance Institute (CII) had warned on a “widening wall of nervousness forming among businesses and professionals on the impact of leaving the EU.” Economic confidence across the insurance profession is at its lowest level since 2011 and nearly half (48 percent) of those working in insurance expect the economy to deteriorate in 2017, according to CII.
“Today’s speech by the Prime Minister about forging a new UK-EU partnership put ‘building certainty where we can’ as principle number 1. We think her final objective of asking for a ‘phased implementation’ period following negotiations seems to partly deliver that,” said Keith Richards, managing director of engagement at the CII.
“Although the Government has not offered the defined transitional period that we were asking for, it has acknowledged the risk of an economic and legal “cliff edge” and the impact it could have, and proposed a “phased period of implementation” to give firms that much needed breathing space to consider what the new EU-UK partnership could mean for them. However she neglected to mention anything about time limits.”
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