Solvency II compliance likely unaffected by UK Brexit

UK insurers will be unable to sidestep the regulatory pressures stemming from the EU even after the UK has exited the market with initiatives such as Solvency II already integral to the UK system, Charles Portsmouth, director at Moore Stephens, has said.

He said that he believes the re/insurance industry has been deeply conflicted about the benefits and drawbacks of being in the EU, as was the rest of the country. But, he said, whilst some celebrate and some mourn, one thing is clear: there will be complications ahead.

“The reality is that a wholesale rollback of regulatory pressures originating from the EU is still unlikely. Major European-level initiatives such as Solvency II have already been incorporated into UK law; they are an integral part of the system in this country,” Portsmouth said.

“Moreover, the UK as a whole and the insurance industry in particular are likely to want to retain access to EU market with a new trade deal. We are still part of a global economy and in order to preserve lucrative ties and be able to sell cross-border, UK-based insurers are likely to find they still have to comply with EU regulation.

“The future of our current EU passporting rights and their use by non-EU companies, through their London based European HQs, to access the EU market will be of prime concern to the insurance industry.

“In short, there are no simple answers to predicting what will happen. However, much EU legislation affecting the insurance industry is likely to be here to stay.”