Lloyd’s chairman says market ‘fully equipped’ to operate in the new environment
LLOYD’S chairman John Nelson has moved to allay fears about the impact of the UK’s vote to leave the EU on the Lloyd’s market.
Mr Nelson said: “Lloyd’s has a well prepared contingency plan in place and Lloyd’s will be fully equipped to operate in the new environment.”
He continued: “For the next two years our business is unchanged. I am confident that Lloyd’s will stay at the centre of the global specialist insurance and reinsurance sector, and I look forward to continuing our valuable relationship with our European partners.”
Senior Lloyd’s figures have consistently said the market would be better off if the UK remained in the EU. The Council of Lloyd’s and Lloyd’s franchise board were both said to be “unanimously” against a UK exit.
Lloyd’s has been working on contingency plans in the event of an exit, however, and the out vote is likely to mean companies that use London as their European hub will rethink their strategy.
Many non-UK insurance companies from areas such as the US and Asia currently use the UK as their European headquarters and as a ‘gateway’ into Europe through EU/EEA passporting.
Jonathan Howe, UK insurance leader at PwC, said: “There is a real risk that these rights could be eliminated and insurers will be thinking about the best location for their bases in the future.
“The loss of these rights could see insurers being forced to restructure and facing large operational, regulatory and tax costs as they adapt to such a change.”
Global insurer AIG has already said it is likely to look to establish an operations centre for Europe outside the UK post-exit from the EU. Its chief executive, Peter Hancock, said the company had already examined some “excellent choices” within the EU as a replacement hub.
Senior industry figures have also voiced fears about the impact of Brexit on the UK’s involvement in regulatory decision-making.
Munich Re recently warned the London market would lose business to other international insurance hubs, such as Singapore and New York, if the UK were to leave Europe.
Zurich Insurance has said on Friday that it expected business and market sentiment would normalise over time following the UK’s decision to leave the EU, according to Reuters.
The Swiss insurance group, which has substantial operations in the UK, said that the UK is a key market for Zurich and that it is “not going anywhere”.
However, the insurer noted that leaving EU was likely to take years and that it was far too soon to say how this would affect Zurich’s business.
Reuters also reported Munich Re’s chief economist Michael Menhart as saying that the UK’s Brexit decision was not likely to impact the insurance industry as heavily as other sectors.
However, he said that London would lose influence as a financial centre to Singapore or New York, and this would affect insurers.