Re/insurance leaders look to calm Brexit concerns but admit challenges ahead
A number of re/insurance leaders have moved to steady the ship and attempt to alleviate panic and uncertainty in the wake of the news that the UK will leave the European Union.
John Nelson, the chairman of Lloyd's, has stressed that he remains confident about the ability of Lloyd’s to continue to prosper long term and has plans in place to cope with the changes ahead.
"I am confident that Lloyd's will stay at the centre of the global specialist insurance and reinsurance sector, and I look forward to continuing our valuable relationship with our European partners," he said.
"For the next two years our business is unchanged. Lloyd's has a well prepared contingency plan in place and Lloyd's will be fully equipped to operate in the new environment.”
Sergio Balbinot, president of Insurance Europe, said he was deeply saddened by the vote but said he hoped the damage can be limited and alternative plans can be agreed quickly.
“We now hope that policymakers can work quickly to limit the impact that this time of uncertainty will have on both consumers and businesses,” he said.
Meanwhile, Huw Evans, the director general of the Association of British Insurers (ABI), moved to reassure customers that the industry will have time to adjust and will be able to cope with the change.
“The UK insurance and long-term savings industry is strong and built to protect customers from market uncertainty and shocks,” Evans said.
“Customers should remember we remain part of the EU until the process of leaving is complete and they should therefore avoid hasty decisions about their financial matters.
“For the UK Government, it will be important now to focus on ensuring the UK remains a globally competitive place to do business with the best possible future trading network with the EU and the wider world.”
Dave Matcham, chief executive of the International Underwriting Association (IUA), echoed this by stressing that while the exit will present challenges he believes the London insurance market is resilient and well-positioned to respond to the result of the referendum and that re/insurers had been planning for this possibility.
“Clearly the UK’s decision to exit the EU presents challenges for London Market companies and uncertainty surrounding the potentially prolonged nature of this process will be problematic for future planning. Our industry is, however, experienced in responding to change,” Matcham said.
“The free trade benefits of EU membership have been vital in maintaining London’s position as a global insurance hub and are highly valued by IUA members. This is true both for insurers headquartered in the UK and those international firms that use London as their centre for European business.
“We know that many companies will now be considering their own individual responses. Continued access to European markets is essential and will, I expect, be at the forefront of the process to respond to the referendum decision. The IUA will be working with the London Market Group to ensure our industry’s views are fully represented as developments continue.”
He also noted that regulations governing the conduct of insurance business in the UK have been established in the context of EU membership. The UK was instrumental in developing Solvency II, which is an evolution of its own predecessor system. For London Market companies conducting European business, the maintenance of regulatory equivalence will be important.
“The IUA’s own research shows that more than 20 percent of our members’ premium income comes from continental European markets. Insurance is almost by definition an international business and in order for it to operate efficiently regulatory developments are pursued at an international level,” he added.
“Outside the EU it will still be desirable for UK supervisors to have reciprocal arrangements in place with other national regulators. Otherwise we will see a duplication of compliance costs that will damage companies and escalate costs for clients.”
