‘Brexit’ could spell trouble for UK-based insurance companies
City Index May 29, 2015 10:36 PM
<p>IUA warns that leaving the EU could mean British insurance firms could not sell policies in Europe.</p>
UK-based insurance companies could be unable to sell policies in Europe if Britain leaves the European Union, it has emerged.
In a statement, the International Underwriting Association (IUA) warned that the so-called 'Brexit' could prevent British insurers from selling policies in Europe. It could also deter overseas companies from setting up offices in London, reports Reuters.
Currently, there is a system of EU "passports," which allows companies in one EU country to carry out business in all others – and the company only needs to have branch offices in, and report to, their home regulator.
The IUA, which represents insurers and reinsurers who operate in London, but which are not part of the Lloyd's of London market, explained: "This arrangement is much more favourable than that for insurers based outside the EU."
It added: "Companies are not [...] obliged to maintain expensive capital holdings in each of the EU member states in which they are doing business."
If the UK decides to leave the EU, the IUA says that insurers and reinsurers from countries outside the European Union - like the US and Japan – might decide to set up offices in other European countries, rather than the UK in order to gain a passport for the entire EU.
The IUA pointed out that, including Lloyds of London, the London insurance market had a total income of £50 billion in 2013.
Bad for business
It's not just the IUA that is warning the Brexit would be bad for the UK's insurance sector.
Inga Beale, chief executive at Lloyd's of London said at a conference earlier this week that it would be "bad for business".
The head of the world's oldest insurance market explained on Wednesday (May 27th): "We think that open trade and being part of a bigger community is very important. I would wholeheartedly welcome a stronger Europe, rather than countries becoming smaller and less important in the world on their own."
Gerry Grimstone, chairman of Edinburgh-based Standard Life agrees. He's also a member of TheCityUK, which promotes Britain as a financial centre. In March, he stated that a British exit from the EU would be "disastrous for London and the UK".
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