Brexit vote extends uncertainty for UK insurance sector
Uncertainty continues for the UK’s insurance industry after the government’s Brexit deal has been rejected yesterday (Jan. 15) in what is dubbed the biggest ever government defeat in history.
"Last night's vote against the proposed withdrawal deal means that uncertainty over Brexit continues, which is not good for business, especially for financial services firms,” said Jennette Newman, partner at law firm Clyde & Co.
“However, the London Market insurance community has in many ways led the way in being prepared for all Brexit eventualities and has played to its strengths as a unique environment for covering risk. Notwithstanding remaining issues around contract certainty in some jurisdictions in the event of no deal, I am confident that it will continue providing vital insurance and reinsurance business in the EU, even if that will be made harder by Brexit,” Newman added.
"The situation with the broking community is more complicated due to the equivalence rules - but negotiations continue with the EU, and it is envisaged a pragmatic solution will be agreed before the 29th March as no continuity is in no one's interests.
The UK is set to leave the EU on March 29 but the deadline could potentially be extended to give the UK more time to agree on which basis the country should be leaving the EU.
"Even if the deal had passed, our future long-term relationship with the EU remains unclear and will be subject to protracted negotiations. The London Market can't and won't wait for absolute clarity and needs to use Brexit as an opportunity to focus without distraction on some of the broader systemic changes in the sector,” Newman noted.
"It must redouble its modernisation efforts to ensure it's as efficient an insurance centre as possible, continue to place itself at the heart of the innovation taking place in the sector, and appeal to a more diverse talent base that will provide the broad range of new skills that will be needed in the insurance sector in the next ten to twenty years."
Omar Ali, UK financial services leader at EY, said the result of the vote in the House of Commons “does not change the outlook for the City. The City has been planning on the basis of no deal for some time and made clear it would need certainty to allow it to change tack. Whilst this result was widely expected, it means there is still no clarity, with just 73 days until the planned exit date.
“Firms have no choice but to fully implement their no-deal plans. EY’s most recent survey of financial services (FS) firms found almost a quarter of respondents (24 percent) already do not believe they have time to execute their Brexit plans by March 2019,” Ali added.
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