DWF Brexit hub
The UK referendum decision on Brexit has led the insurance industry into a period of uncertainty and as we look towards an exit from the EU it is inevitable that there will be ramifications. Concerns around access to the single market and the ability to recruit and keep talented individuals from the EU are at the forefront of the discussion, along with the prospect of continued market volatility.
The UK is unlikely to cease to be a member of the EU until at the earliest late 2018 because of the requirement in Article 50 to give two years' notice, so it may be some time before we see any changes around the UK’s EU membership. This therefore gives those in the insurance sector time to consider the impact of Brexit, identify the potential risks, challenges and opportunities, and to plan ahead in order to maintain the top three status that the UK insurance industry has on a global scale.
Access to the single market
A material change will only occur if the terms negotiated in relation to Brexit do not result in the UK having a similar status to a country like Norway which, as a member of the EEA but not of the EU, is able to participate in the single market for insurance services in the same way as EU member states.
Insurers and Intermediaries need to carefully consider what affect any loss of UK passporting rights will have to their business. If passporting between the UK and EEA ceases to be permissible on a broadly similar basis as applies at present it may be necessary for groups to reorganise their business structures, this could raise new challenges for the industry.
If the leave arrangements with the EU allow the UK to trade on similar terms then this should mean that legal and regulatory landscape in the UK would remain broadly the same. For example the elements of the Solvency II regime would most likely remain similar for the UK. Firms do need to carefully consider the cost implications to any potential changes to regulation and the knock on effect that this would have on premiums.
Of course, the removal of any EU regulation has the potential to cause challenges between the UK and the EU, leading to more compliance and costs. However, those doing business on a global scale may also see the benefit from this.
DWF is able to help with planning and implementing strategic responses to the challenges posed by Brexit for clients, both from the UK perspective and from that of other European states through our branch offices and associated firms.
You might find it useful to discuss the issues with one or more of the team, if so contact Claire Bowler.
The changes to the current legal and regulatory operating framework for the insurance market will most likely be announced by the following: HM Treasury, Bank of England (Prudential Regulation Authority), Financial Conduct Authority. Further sources of information and regular updates can also be found on Lloyds, FOIL and ABI websites.