Insurance leaders move to alleviate panic in the wake of the news that the UK will leave the European Union
A number of insurance industry leaders have voiced their views on the impact of Brexit.
Lloyd’s chairman John Nelson said: “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.
“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.”
The Association of British Insurers director general Huw Evans said: “The UK insurance and long-term savings industry is strong and built to protect customers from market uncertainty and shocks.
“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.
“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% 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.”
But Munich Re chief economist Michael Menhart said: “London will lose influence as a financial centre to hubs such as Singapore or New York, and this will also affect insurers.” He also said that the referendum decision is not likely to impact the insurance industry as heavily as other sectors.