LONDON, March 9 Britain needs a new trade deal
with the European Union which gives UK and EU insurers and
reinsurers the right to operate across borders, an industry
lobby group said on Thursday.
Many businesses in Britain are already looking at setting up
subsidiaries in the EU to prepare for a "hard Brexit", in which
they would lose the right to sell goods and services across the
U.S. insurer AIG said this week it planned an EU hub
in Luxembourg following Britain's decision to leave the bloc,
the biggest financial services firm so far to detail such a
Lloyd's of London, the worlds' largest speciality insurance
market, is due to decide by the end of the month where to
locate its EU subsidiary in the event of a loss of so-called
passporting rights which allows it to do business in the EU.
Nicolas Aubert, chairman of the insurance lobby London
Market Group, said an EU trade deal was "crucial", with more
than 8 billion pounds ($9.72 billion) in insurance premiums from
the European Union written annually in London.
The LMG was working with the British government to look for
"existing precedents in current international agreements which
could be used for the Brexit negotiations to support our
industry", Aubert said in a statement accompanying the group's
Banks, insurers and asset managers have given up on demands
for full EU passporting rights after Brexit and are instead
asking for limited market access for some sectors.
Insurers will decide by June 2017 where to set up EU
subsidiaries to enable them to keep selling insurance across the
bloc, given the process takes 18-24 months, the LMG said.
The cost could be 50 million pounds, in addition to capital
costs from splitting into two regulated entities, it said.
The London insurance market was also seeking a guarantee of
regulatory equivalence with EU capital rules, the LMG said.
"We expect that the EU will not permit UK undertakings to
carry on business in the EU if there is a fundamental divergence
in regulatory standards," it said.
Some insurers have said existing EU rules make it too
expensive to invest in illiquid assets such as infrastructure.
But the Bank of England has said the rules need tweaks rather
than an overhaul.
The LMG also said it was seeking a transition period to
implement any new arrangements post-Brexit, during which time UK
insurers would keep single market access.
($1 = 0.8227 pounds)
(Reporting by Carolyn Cohn. Editing by Jane Merriman)