29th November 2017:-
The London Market Group (LMG) has published a detailed proposal
for the UK Government that sets out a mechanism that would enable the EU and UK to
maintain access to their insurance markets and control over their respective regulatory
systems, once the UK leaves the European Union (EU).
At the heart of the LMG’s proposal is the need to allow clients uninterrupted access to
London’s breadth of expertise and specialist risk capacity. It will ensure that neither the EU
nor UK will have to sacrifice market access or control over their respective regulatory
regimes.
The LMG Brexit taskforce, representing the UK’s commercial insurers, reinsurers and
brokers, has centred its proposal on a Free Trade Agreement (FTA). This would be a
bespoke agreement that would permit mutual market access and recognition of both the EU
and UK’s prudential regimes - with a Solvency II equivalence outcome built into it. It would
also include a recommended framework for supervisory cooperation, which would align
regulatory oversight of (re)insurers and brokers/intermediaries in both the EU and UK.
The agreement proposes a ‘prudential carve-out’ and is not a new concept to the EU. The
solution builds on bilateral agreement between the EU and the US that came into force on
the 7th November, for reinsurance business. This allows EU and US reinsurers to operate in
each other’s’ jurisdiction, without the need for a local presence, and it aligns their regulatory
systems via a mutual regulatory cooperation and collaboration agreement.
The LMG is also suggesting a complementary transition period. This would provide
continuity of client service by allowing the London Insurance Market to operate as if EU
status is preserved until such time as the FTA is agreed. Such a period would further allow
sufficient time for the Market to reshape in line with the FTA outcomes.
Malcolm Newman, MD of SCOR’s EMEA Hub, Chairman of the International Underwriting
Association and sponsor of the LMG’s taskforce said:
“Our proposal offers clear mutual benefits to clients on both sides of the Channel, and
creates a workable solution that would mean that neither the EU nor the UK would have to
sacrifice market access or control over their respective regulatory regimes, solving the
access versus control dilemma.
The London Market plays a vital role in pooling risk across the EU and UK markets, and we
are all focused on ensuring continued access to the broad range of insurance services,
expertise and capital that we offer to EU businesses. Our goal is to ensure that clients are
not left in a situation where there is contractual uncertainty and protection gaps post Brexit.”
The LMG proposals have been designed to:
Click here for the document - LMG Proposals for a future trading relationship between the EU and UK_secure
Click here for the document - LMG Brexit Roadmap document
