UK voters have a big decision to make in June – Stay in or exit the EU. Whilst the government is making clear arguments for staying in the EU, what affect would Brexit have on the London insurance market?
The London insurance market is the largest specialist insurance and reinsurance market in the world comprising 350 firms and accounting for 20% of the City’s GDP. It employs 48,000 people and writes £6.6 billion of Gross Written Premiums annually. However, not everyone in this market is in agreement on issues surrounding Brexit, with some saying it would be good for the market and others concerned that isolation would hurt businesses. Many in the City also remember the warnings back in the 1990’s that it would die if the UK rejected the Euro. These warnings ultimately proved to be groundless.
So, should we stay? Absolutely. The EU provides access to the worlds largest insurance market with over 500 million people and being part of this gives us access to some of the best talent in the world. We can be confident that we can attract the very best people from across other European financial centres. We are also able to trade freely with all 27-member states and to establish branches in those states. Being part of a larger Europe also gives us greater power to negotiate trading agreements with the rest of the world. Would we have the same influence and power as a nation of just 63 million people? Some would say not.
Of course many may say that this all comes at a heavy price with Solvency II and with increased regulations. However, it is worth remembering that UK regulators helped to design the EU regime so would things really be any different if we were isolated? I think we would be kidding ourselves to think that the regulatory regime after Brexit would result in a lighter touch.