London Market Group believes in beneficial Brexit deal
The London Market Group (LMG) believes that a trade deal which provides mutual benefits to both the UK and the EU is within the government’s reach.
The association recommends the government to focus on three key areas in the negotiations. The need for a guarantee that the London insurance market will be considered to have regulatory equivalence with the EU; a new trade deal with the EU that gives both UK and EU re/insurers and brokers continued rights to undertake cross border activity; and the early agreement on an implementation period to avoid a cliff edge on the day the UK leaves the EU.
Nicolas Aubert, chairman of the LMG, commented: "Since before the referendum LMG has focused on building important relationships with government and we appreciate their willingness to develop an ongoing dialogue. As a result of these discussions they understand that a new deal is critical. Over £8 billion of EU business comes to London. So, we are continuing to work closely with the government to see where there are existing precedents in current international agreements which could be used for the Brexit negotiations to support our industry.
"While these alone will not be enough, they are a good place to start and could provide elements that deliver significant advantages to both UK and EU insurers, reinsurers and brokers. This is crucial as it is not legally possible to write EU business from the UK under WTO Rules."
LMG also believes that Brexit offers an opportunity to review the current regulatory environment to ensure that domestic regulation remains proportionate and does not put London at a disadvantage.
Aubert continued: "Our competitor hubs in Bermuda, Dubai, Singapore and Zurich have regulators with duties to actively support the promotion of their local insurance markets. The FCA and PRA do not have such objectives and we think there would be value in giving them a balancing statutory objective to consider the impact of their actions on the competitiveness of the financial services sector.
"We would also like to see the creation of a dedicated inward investment unit in the Bank of England to support and encourage new entrants to the UK as well as retain those currently present through the implementation of the new agreement. This would ensure that our regulators maintain a day-to-day focus on helping to maintain London as the global centre for specialty commercial insurance and reinsurance.
"We are right at the start of the negotiations and we are optimistic about what can be achieved. We welcome the government’s desire to work collaboratively with the industry to get the very best deal for the London Market and the UK economy."
