Brexit could hit London insurance market

Iggy Pop auto insurance advert, Sheffield. [Francisco Osorio/Flickr]

A British exit from the European Union could hit London insurers’ ability to sell policies in Europe and may deter overseas players from opening London offices, a trade body said on Friday.

Through a system of EU “passports”, companies in one EU country can carry out business in all the others while opening only branches and reporting to their home regulator.

“This arrangement is much more favourable than that for insurers based outside the EU,” the International Underwriting Association (IUA) said in an emailed statement.

>>Read: What can Brussels do to avoid Brexit?

“Companies are not … obliged to maintain expensive capital holdings in each of the EU member states in which they are doing business.”

The IUA represents insurers and reinsurers who operate in London but are not part of the Lloyd’s of London market.

“If the UK were to exit, insurers and reinsurers from … countries such as the United States and Japan might be obliged to choose other European centres over London in order to passport into the EU.”

Including Lloyd’s of London, the London insurance market had total income of 50 billion pounds in 2013, the IUA said.

>>Read: Brexit battle will be won, or lost, on the economy

Lloyd’s of London Chief Executive Inga Beale told a conference this week that Brexit would be “bad for business”.

Gerry Grimstone, chairman of Edinburgh-headquartered insurer Standard Life and of TheCityUK, which promotes Britain as a financial centre, said in March that a British exit from the EU would be “disastrous for London and the UK”.

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