Insurance Jottings
UK Faces ‘Abject Future’ After Brexit, Warns Former Lloyd’s Chairman
The UK is facing a grim future after Brexit because of the failure of the its politicians to govern responsibly, the former chairman of insurance market Lloyd’s of London has written in a letter to the Financial Times.
“Never in over 50 years of working life have I seen the UK facing such an abject future,” said John Nelson, who said the situation was “caused by the complete failure of our political establishment to govern, to communicate clearly with the public and most importantly to be honest with the electorate.”
He said that leaving the EU, even on the basis of the position recently agreed by the UK government, would lead to it “becoming a much poorer country than anybody was led to believe during the appallingly conducted referendum campaign.”
The impact on the economy, employment and the provision of public services such as agriculture, health care and air transport have been underestimated, he argued, lost amid a lack of cooperation between MPs.
Without naming anyone, he criticised the “ambition and vanity” of senior politicians, who he said are not acting in the best interests of their country. He also criticised a “silent majority” of others in the major parties who seem terrified of raising their views and called on British businesses to speak up to give their account of the true consequences of Brexit.
“Personal experience tells me that negotiating overseas rights is a long and painful process,” he said. “As a small economy, the leverage we have is limited and far less than operating as a trade bloc, which is the EU.”
LIIBA warns members over no-deal Brexit
The London Insurance and International Brokers Association (LIIBA) is calling for its members to prepare for the possibility that the UK will leave the EU without a trade deal.
LIIBA noted that as of the end of July, there is now a higher risk that the UK will exit the EU with no deal in March of 2019. The report urges members to consider how they will continue to service EU clients’ needs in that eventuality.
As part of the preparations, member brokers may need to create subsidiary entities within the European Union.
“The concept of mutual market access looks to be dead in the water,” said LIIBA CEO Christopher Croft. “So, at this advanced stage of the game, it would be foolish to ignore the very real possibility of no-deal for the UK. That’s why we’re encouraging our members to address this scenario now,” he noted.
“We have been liaising closely with the Belgian government and regulators to assist any member who might consider Brussels as a location for such a subsidiary. These discussions have been very positive.
“We’ve also had an introductory meeting with officials from the Greek Embassy. This was also positive, and LIIBA will be pursuing a more in-depth exploration of whether Athens or Piraeus could prove a viable alternative location,” Mr Croft added.
Brexit Is Greatest Structural Challenge Facing London Company Market: IUA Chairman
Brexit is the greatest structural challenge facing the London company market, said the chairman of the International Underwriting Association, Malcolm Newman.
The UK’s break from the EU is affecting insurers, brokers and clients in varying ways, but none felt as informed as they might expect to be, Mr Newman said at the IUA’s annual general meeting on the 25th July.
“The IUA and the wider market has urged regulators not to create unnecessary new barriers to business and was pleased to welcome the Prudential Regulation Authority’s planned approach to the authorisation of EU branches operating in London,” he said.
“This promises to help preserve London’s unique depth of insurance expertise and resource and suggests a high degree of future supervisory cooperation between the UK and EU,” he added.
“We were disappointed that our desire for a comprehensive free trade agreement based on mutual market access for our customers seems now to be impossible,” Mr Newman commented. “Businesses need to continue to access our market’s specialist risk capacity and we continue to work closely with the market to influence positive outcomes from the Brexit negotiations.”
Mr Newman said it is frustrating the negotiations are not as well advanced they need to be. “We sincerely hope that the next few months will lead to successful conclusions to satisfy our market’s needs and preserve our unique trading advantages of talent, capital and innovation.”
During his speech, Mr Newman also reviewed how the need to make transacting business with London an easier and more efficient process is driving take up of electronic trading. This fundamental change to the way insurance contracts are placed is steadily growing as the number of businesses classes available on the London Market’s Placing Platform system increases, he said.
IUA members are working to introduce electronic placement along with other modernisation facilities and next year will see these utilities funded on a user-pays basis.
The IUA represents international and wholesale insurance and reinsurance companies operating in or through London.
Chubb European Group converts to Societas Europaea (SE) ahead of redomicile to France on the 1st January 2019
Chubb European Group has announced the achievement of an important regulatory step in its Brexit preparations to redomicile its businesses to France. This will provide customers with continuous, uninterrupted service regardless of the outcome of Brexit negotiations between the UK and the European Union.
On the 19th July, both Chubb European Group and ACE Europe Life converted to Societas Europaea (SE), which enables these companies to redomicile to another EU jurisdiction and continue to undertake business both across the EU and into the UK via a branch.
Previously, on the 11th July 2018, Chubb received authorisation from the Board of the French supervisor Autorité de Contrôle Prudentiel et de Résolution (ACPR) to redomicile the businesses to France on the 1st January 2019, subject to the fulfilment of certain administrative requirements by year-end 2018.
Until the 31st December 2018, Chubb European Group SE and ACE Europe Life SE will still be domiciled and have their registered office at the same address in England and will remain authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Markel Licensed to Form Insurer in Germany, Securing Post-Brexit EU Access
Markel Corporation has announced it has been granted a licence by the German federal financial supervisory authority, BaFin, to establish an insurance company in Germany.
Following Brexit, the United Kingdom’s exit from the European Union, Markel Insurance SE (MISE) will be able to meet the insurance needs of clients located or with risk exposures in the European Economic Area (EEA).