(Reuters) - The Association of British Insurers (ABI) warned on Monday that if Britain leaves the European Union without a deal it could cause long-lasting damage to the UK insurance industry.
A no-deal Brexit would leave Britain’s trading relationship with the EU subject to World Trade Organisation rules, which do not guarantee market access for service industries like insurance.
“This matters because the EU is - by a very long distance - the largest export market for the UK insurance and long-term savings industry,” Huw Evans, Director General of the ABI, said in a statement ahead of the trade body’s annual dinner in London.
Britain’s government is considering different options, including possibly delaying Brexit, if parliament fails to approve Prime Minister Theresa May’s deal by March 12.
“As a last resort, if the only alternative to no deal is some form of short delay to Brexit, then delay we should,” Evans said.
Evans also warned that Brexit could leave Britain’s insurance industry subject to rules set by the EU without the UK having any say over them. That would raise the risk of insurers having to hold more capital than they need which could damage competitiveness, reduce investment in the economy and see people get less from their pension.
“Any future arrangement with the EU that required the UK to comply with rules it had no say over could be weaponized by those in the EU that want to damage the UK,” Evans warned.
“... It would be naive to think that over the course of the next few decades, EU rules will do anything other than reflect the interests of its members, not its former members, seeking to draw capital, talent and market infrastructure into the EU27.”
(Graphic: UK Insurers Look For Brexit Clarity - tmsnrt.rs/2EuOJ69)
Evans said Britain’s insurers have transferred about 29 million insurance contracts and set up about 40 new hubs in the EU to minimize Brexit disruption to customers.
Several insurers are transferring policies of EU based customers to new hubs in the bloc, though Lloyd’s of London won’t complete the transfer of business to its new Brussels subsidiary before March 29.
Hiscox , part of the oldest insurance market in the world, 2018, said on Monday a legal process to transfer some policies and liabilities to its Luxembourg hub gave certainty to its customers that it could legally pay all valid claims, even in a hard Brexit scenario.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong