Posted on Wednesday, May 25, 2016On June 23, 2016, the UK will vote on whether to leave the EU. With the highly anticipated EU Referendum only one month away, there’s been a lot of buzz about the effect that a “Brexit” will have on Europe’s insurance industry – the world’s largest insurance market.
Currently, London Market insurers enjoy the benefits of access to the European Single Market, recently confirmed by Solvency II, and “passporting” schemes. The single market system allows UK-regulated insurers the freedom to transact business, write insurance policies, and open subsidiaries in 27 other member countries, without being subject to regulations of those countries. If the UK decides to leave the EU, the London Market insurers may lose those benefits, pending the outcome of post-Brexit negotiations. This could affect the ease with which UK-based insurers and brokers currently transact cross-border business in EU countries, and make it more expensive.
At a minimum, a period of uncertainty will follow if the UK decides to Brexit, and policyholders and brokers are expected to feel the downstream effects of an indeterminate market. Commercial Risk Europe provides further comment on the potential consequences: London insurers express grave concerns for Brexit
