Companies operating in the London insurance market are zeroing in on four priorities for the upcoming Brexit negotiations.
The objectives outline arrangements that will help the City of London “maintain its position as the largest global center for commercial and specialty risk,” said the International Underwriting Association (IUA), which issued the objectives on behalf of its membership, the international and wholesale (re)insurance companies operating in or through London.
The IUA said the objectives cover access to the single market, legal considerations, tax issues and uncertainty around the transition process.
Regarding the single market, the IUA said that members of its Legal and Regulatory Committee believe it is vital to maintain existing freedoms for insurance services. “Any trade agreement between the UK and EU should first preserve passporting and branching arrangements and recognize the equivalence of regulatory regimes,” said the association in a statement.
Secondly, the IUA emphasized, no barriers should be created that impede the use of English law contracts and standard London market contractual forms in cross-European business. “It will be important to provide clarity on which law UK courts will apply to contracts and to eliminate any doubts about the validity of contracts written prior to Brexit.”
In the third objective, covering tax, the IUA said there should be an early indication of the future value-added-tax regime for insurance companies operating in the UK. “The UK and EU should agree that consistency, fairness and transparency should apply for companies to any tax implications arising from Brexit,” the association continued.
“Finally, customer concerns about future arrangements for providing cover mean that insurers will be seeking to establish branches or subsidiaries both in the UK and various other European jurisdictions,” the IUA said, noting that regulators will need to prepare to deal with an unprecedented increase in license applications.
To minimize uncertainty, it would be helpful for the UK and EU to reach an early understanding about where their discussions should lead, the IUA’s statement went on to say.
“The London company market’s priorities for Brexit are quite clear. It is essential to maintain a level playing field so that insurers can operate across the continent without the need for local licences,” said Dave Matcham, IUA chief executive.
“At the same time, the competitiveness of London as a global hub will be preserved by allowing European firms to easily maintain a presence here through branch offices. The UK’s regulatory regime should remain equivalent to the EU Solvency II system, and there should also be continued mutual recognition of portfolio transfer and data protection arrangements,” Matcham continued.
“Brexit negotiations will, of course, take at least two years, and it is important to mitigate as much as possible the uncertainty that this process will inevitably engender. In particular, regulatory authorities, both in the UK and continental Europe, should work together to help insurers put smoothly in place whatever contingency plans are required to maintain client services,” he said.
The IUA is working with the London Market Group to present to government the concerns of its member companies about the Brexit negotiation process.
Source: International Underwriting Association