* Six U.K. P&I clubs account for half market share
* Europe represents 30-50 percent of clubs' global business
* Two P&I clubs already regulated in Luxembourg
By Jonathan Saul and Carolyn Cohn
LONDON, Feb 24 U.K.-regulated ship insurers are
preparing plans to open new outposts in European Union
jurisdictions such as Luxembourg and Cyprus, fearing that Brexit
will hinder access to the EU's financial market, industry
sources involved say.
Britain dominates the global marine insurance market and
losing access to specialist Protection and Indemnity (P&I) clubs
- marine insurers owned by shipping firms - could further weaken
other parts of its multi-billion pound shipping services sector.
Several Greek shipowners have already moved operations out of
Britain anticipating changes that could remove their favourable
"non-domicile" tax status.
Of the 13 major global P&I clubs, six are regulated in the
United Kingdom and are estimated to account for over half the
total market share of an industry that insures about 90 percent
of the world's ocean-going tonnage. Many of the clubs have been
an integral part of the City of London for nearly two centuries.
Many sections of the financial industry have said they may
need to relocate certain businesses after Brexit, but for P&I
clubs the issue is particularly acute because a greater share of
their earnings comes from elsewhere in Europe.
While negotiations between Britain and the EU have yet to
start, the central concern is the loss of "passporting" rights
that enable financial firms to operate across the bloc under the
supervision of one member state's regulator.
Anthony Jones, director with London Club, one of the six,
said it was "actively exploring our options for a post-hard
Brexit operating scenario", referring to Britain making a clean
break with the European Union.
"We have prepared a shortlist of potential jurisdictions
from which we could write EEA (European Economic Area) business,
and our investigations are continuing as we attempt to identify
which of these might best suit our requirements," Jones said,
declining further comment.
Insurance and shipping sources say landlocked Luxembourg is
among the top contenders. Two P&I clubs are already regulated
there, it has a cluster of other maritime companies and
businesses like its regulatory and tax regimes.
A spokeswoman for Luxembourg for Finance - the national
financial development agency - said numerous U.K. companies
including insurers were currently considering Luxembourg for
their post-Brexit set-up. She declined further comment.
Claude Wirion, director of Luxembourg's insurance regulator
CAA, said it had a long track record of supervising
internationally active insurers including P&I clubs. He declined
comment on whether there were discussions with other clubs.
Shipping sources said Cyprus was another possible
destination, keen to boost its maritime industry and recently
attracting more shipping companies, including Greek shipowners
previously based in London.
A Cypriot official said there had been early communication
over potential interest by clubs to establish a base there,
declining further comment.
Andrew Bardot, executive officer of the International Group
of P&I Clubs - the umbrella association for the 13 insurers -
said other possible jurisdictions included Ireland, Germany and
"'Wait and see' is not an option given the time that it will
take (to set up) a regulated subsidiary within an EU member
state," he said.
Europe represents 30 to 50 percent of the clubs' global
business, partly due to the dominance of Greek shipping
companies in the industry. In contrast Lloyd's of London, the
world's leading specialty insurance market, gets around 11
percent of its business from countries outside Britain in the
EU's shared market.
A study conducted by the City of London Corporation last
year showed P&I clubs with a presence in the U.K. accounted for
over 1 billion pounds ($1.25 billion) of U.K. gross earned
premiums, out of a total of 7.5 billion pounds for the marine
insurance sector in 2014.
North Club, another British-regulated P&I insurer, said it
was "working on a range of contingency plans", which included a
new EU outpost.
Britannia Club said it was "considering its options", while
Standard Club and UK Club declined to comment on their plans.
Steamship Mutual Club did not have immediate comment.
Of the two regulated in Luxembourg, Shipowners Club declined
The other, West of England Club, said U.K. regulated clubs
were likely to be getting on with "some form of dialogue with
regulators like Luxembourg".
"If you had to do it, you would want to be talking to at
least a handful of regulators to get a dialogue going with each
to ensure not being at the back of the queue," said West of
England's CEO Peter Spendlove.
($1 = 0.7967 pounds)
(Additional reporting by Michele Kambas in Athens, Robert-Jan
Bartunek in Brussels and Pamela Barbaglia in London; Editing by