LMG proposes free trade agreement to retain market access post-Brexit
The London Market Group (LMG) has published a proposal centred on a free trade agreement (FTA) that would enable the EU and UK to maintain access to their insurance markets and control over their regulatory systems after Brexit.
LMG's proposal on an FTA would be a bespoke agreement that would permit mutual market access and recognition of both the EU and UK’s prudential regimes - with a Solvency II equivalence outcome built into it.
Furthermore, it would include a recommended framework for supervisory cooperation, which would align regulatory oversight of re/insurers and brokers/intermediaries in both the EU and UK.
LMG proposes a 'prudential carve-out', a solutions that builds on a bilateral agreement between the EU and the US that came into force on November 7 for reinsurance business. This allows EU and US reinsurers to operate in each other’s jurisdiction, without the need for a local presence, and it aligns their regulatory systems through a mutual regulatory cooperation and collaboration agreement.
There would be also be a complementary transition period, that would provide continuity of client service by allowing the London Insurance Market to operate as if EU status is preserved until such time as the FTA is agreed.
“Our proposal offers clear mutual benefits to clients on both sides of the Channel, and creates a workable solution that would mean that neither the EU nor the UK would have to sacrifice market access or control over their respective regulatory regimes, solving the access versus control dilemma," said Malcolm Newman, MD of SCOR’s EMEA hub, and chairman of the International Underwriting Association and sponsor of the LMG’s taskforce.
“The London Market plays a vital role in pooling risk across the EU and UK markets, and we are all focused on ensuring continued access to the broad range of insurance services, expertise and capital that we offer to EU businesses. Our goal is to ensure that clients are not left in a situation where there is contractual uncertainty and protection gaps post Brexit.”
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