U.K.-regulated ship insurers are preparing plans to open new outposts in European Union jurisdictions such as Luxembourg and Cyprus, fearing that Brexit will hinder access to the EU’s financial market, industry sources involved say.

Britain dominates the global marine insurance market and losing access to specialist Protection and Indemnity (P&I) clubs – marine insurers owned by shipping firms – could further weaken other parts of its multi-billion pound shipping services sector. Several Greek shipowners have already moved operations out of Britain anticipating changes that could remove their favorable “non-domicile” tax status.

Of the 13 major global P&I clubs, six are regulated in the United Kingdom and are estimated to account for over half the total market share of an industry that insures about 90 percent of the world’s ocean-going tonnage. Many of the clubs have been an integral part of the City of London for nearly two centuries.

Many sections of the financial industry have said they may need to relocate certain businesses after Brexit, but for P&I clubs the issue is particularly acute because a greater share of their earnings comes from elsewhere in Europe.

While negotiations between Britain and the EU have yet to start, the central concern is the loss of “passporting” rights that enable financial firms to operate across the bloc under the supervision of one member state’s regulator.

Anthony Jones, director with London Club, one of the six, said it was “actively exploring our options for a post-hard Brexit operating scenario,” referring to Britain making a clean break with the European Union.

“We have prepared a shortlist of potential jurisdictions from which we could write EEA (European Economic Area) business, and our investigations are continuing as we attempt to identify which of these might best suit our requirements,” Jones said, declining further comment.

Insurance and shipping sources say landlocked Luxembourg is among the top contenders. Two P&I clubs are already regulated there, it has a cluster of other maritime companies and businesses like its regulatory and tax regimes.

A spokeswoman for Luxembourg for Finance – the national financial development agency – said numerous U.K. companies including insurers were currently considering Luxembourg for their post-Brexit set-up. She declined further comment.

Claude Wirion, director of Luxembourg’s insurance regulator CAA, said it had a long track record of supervising internationally active insurers including P&I clubs. He declined comment on whether there were discussions with other clubs.

Shipping sources said Cyprus was another possible destination, keen to boost its maritime industry and recently attracting more shipping companies, including Greek shipowners previously based in London.

A Cypriot official said there had been early communication over potential interest by clubs to establish a base there, declining further comment.

Andrew Bardot, executive officer of the International Group of P&I Clubs – the umbrella association for the 13 insurers – said other possible jurisdictions included Ireland, Germany and Greece.

“‘Wait and see’ is not an option given the time that it will take (to set up) a regulated subsidiary within an EU member state,” he said.

British Economy

Europe represents 30 to 50 percent of the clubs’ global business, partly due to the dominance of Greek shipping companies in the industry. In contrast Lloyd’s of London, the world’s leading specialty insurance market, gets around 11 percent of its business from countries outside Britain in the EU’s shared market.

A study conducted by the City of London Corporation last year showed P&I clubs with a presence in the U.K. accounted for over 1 billion pounds ($1.25 billion) of U.K. gross earned premiums, out of a total of 7.5 billion pounds for the marine insurance sector in 2014.

North Club, another British-regulated P&I insurer, said it was “working on a range of contingency plans,” which included a new EU outpost.

Britannia Club said it was “considering its options,” while Standard Club and UK Club declined to comment on their plans. Steamship Mutual Club did not have immediate comment.

Of the two regulated in Luxembourg, Shipowners Club declined to comment.

The other, West of England Club, said U.K. regulated clubs were likely to be getting on with “some form of dialog with regulators like Luxembourg.”

“If you had to do it, you would want to be talking to at least a handful of regulators to get a dialog going with each to ensure not being at the back of the queue,” said West of England’s CEO Peter Spendlove. ($1 = 0.7967 pounds)

(Additional reporting by Michele Kambas in Athens, Robert-Jan Bartunek in Brussels and Pamela Barbaglia in London.)