UK regulator to allow EU insurers to operate normally post-Brexit
A number of representative bodies and Lloyd’s have welcomed the announcement by the Bank of England that it will allow EU banks and insurers to operate normally in the UK post-Brexit and is undertaking a review of its authorising and supervision policies for international firms.
“The foundation of the Bank of England’s approach is the presumption that there will continue to be a high degree of supervisory cooperation between the UK and the EU. On this basis, EEA banks and insurers may (if they are not conducting material retail business) apply for authorisation to operate as a branch in the UK. There are expected to be no implications of the proposed policy for the current operations of banks and insurers from non-EEA countries such as the US, Switzerland and Japan,” the bank said in a statement yesterday (Wednesday December 20).
It said its approach is rooted in the “substantial evidence” that openness supports economic dynamism through a range of channels, raising growth and boosting living standards. “Keeping the UK’s financial system open to foreign institutions is in the best interests of the UK, EU and global economies,” it said.
“Having a large financial sector brings substantial benefits to the UK. A deep and liquid financial market lowers the cost of finance to households and businesses.”
Dave Matcham, chief executive of the International Underwriting Association, welcomed news of the UK regulator’s intention to accommodate branches of EU insurers post-Brexit.
He said: “This is a very welcome announcement for many IUA members. The London company market has a significant number of firms operating as branches of parent companies located elsewhere in the EU. Our recent London Company Market Statistics Report estimates premium totalling £7.383bn was generated by such business models in 2016.
"The move to enable this business to continue without any unnecessary, additional regulatory barriers post-Brexit is a very positive step and demonstrates great confidence in our sector."
Lloyd’s also welcomed the publication by the Bank of England of its approach to the supervision of international insurers, and to branch authorisation and supervision.
Bruce Carnegie-Brown, chairman of Lloyd’s, said: “We welcome the government’s proactive approach to the supervision of international insurers, which, if applied, would help the continuity of business through the post-Brexit implementation period. This will provide greater certainty to insurers and UK policyholders, reinforcing London’s position as the world’s leading insurance centre. This is a very positive development, which will contribute to financial stability to the benefit of all parties in the insurance sector.”
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