UPDATE 1-Passporting "vital" for insurers after Brexit - trade body

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LONDON, Nov 30 (Reuters) - Insurers operating in Britain must continue to be able to sell their products freely across the European Union after Britain leaves the bloc, an insurance trade body said on Wednesday.

Insurers are reliant on so-called passporting rights to sell insurance policies throughout the European Union. Several, including the Lloyd’s of London insurance market, have said they will need to set up EU subsidiaries if Britain loses access to the single market.

“It is vital to maintain existing freedoms for insurance services,” the International Underwriting Association said in its first statement detailing its views on Brexit since the June referendum.

“Any trade agreement between the UK and EU should first preserve passporting and branching arrangements and recognise the equivalence of regulatory regimes.”

Worries from customers about future insurance cover meant insurers would look to establish branches and subsidiaries in Britain and Europe as protection against a possible loss of passporting rights, the IUA said.

“Regulators will need to prepare to deal with an unprecedented increase in license applications.”

British insurers have been quicker than banks to outline plans to set up regulated subsidiaries in the EU if they lose single market access, with Dublin the favoured location.

U.S. insurer AIG last week said it may move its European headquarters from London to another EU country because of the Brexit vote.

The IUA said it is working with the London Market Group, which represents several insurance trade bodies, to present its concerns over Brexit to the UK government. (Reporting by Carolyn Cohn; Editing by Rachel Armstrong, Greg Mahlich)