Brexit will dominate 2018
While the UK last-minute deal with the EU in a bid to move Brexit talks on to the next phase, the topic is likely to dominate the year of 2018, according to many of the executives who we interviewed for our year-end questionnaire.
“2018 will be about Brexit,” said David Gittings, chief executive of the Lloyd’s Market Association.
“Recent developments that point to a softer Brexit and the possibility of continued free trade with the EU in financial services are certainly promising, but the Lloyd’s market centrally, and at the individual managing agency level, has contingency plans in place to ensure a smooth transition for clients, no matter what the outcome,” Gittings noted.
The insurance industry is worried that it might lose access to the EU market as a result of a Brexit deal. Consequently, many insurers have created new subsidiaries in the other EU countries to make sure they can continue servicing their clients after Brexit.
“The continued uncertainty is not good for our market,” Gittings said. “Over a very long time our members have worked hard to build relationships in Europe, and that work has paid off in recent years. They also employ a great many people from the European Union.
UK Prime Minister Theresa May has struck a last-minute deal with the EU in a bid to move Brexit talks on to the next phase. The European Commission president said it was a "breakthrough" and he was confident EU leaders will approve it, according to a Dec. 8 BBC News article.
But in the second phase the negotiations will be focusing on trade, and that agreement has been reached on the rights of EU citizens in the UK, both crucial points for the re/insurance industry.
“We need to reduce Brexit uncertainty quickly, so we can transition smoothly and appropriately for our European brokers, coverholders and customers post Brexit. I am confident that will happen, because of the work of the LMA and others in explaining and highlighting the importance of Brexit issues for the insurance industry,” Gittings said.
Iain Bremner, managing director, Barbican Managing Agency, noted that efforts are ongoing to establish an insurance-specific free trade agreement for the London Market that will stave off any potential negative impact on our ability to operate across the EU.
“There is obviously still much uncertainty as to how our departure will impact the standing of the market, but all efforts are focused on creating a workable solution that will enable London to maintain the successful trading relationships it has with member states,” he noted.
Lloyd’s is forging ahead with its preparations for Brexit, including the establishment of a hub in Brussels, to ensure that it can keep open its access to the single market following the UK’s departure, Bremner said.
The application is currently with the Belgian regulator and Lloyd’s remains on track to open the new company in time for business incepting from Jan.1, 2019.
This is just a snapshot of what executives told us in our Christmas questionnaire. For the full comments from all 16 executives that took part in our survey, please click here.
