The Association of British Insurers has urged the UK government to be decisive in its plans and seek an early agreement with European partners following Brexit, or risk unnecessary business loses in the insurance sector.
Huw Evans, director General of the Association of British Insurers (ABI) called on UK PM Theresa May to “make a clear commitment that it will seek an early agreement with our European partners on a high level transitional implementation period” and warned that without this commitment UK insurers most affected by Brexit could be forced to take decisions to leave the UK before a final Brexit deal is clear.
Speaking at Insurance Ireland’s INED Seminar 2016 in Dublin, yesterday afternoon, Evans told a packed audience that underpinning the association’s five key asks, outlined below, on Brexit, is a sustained focus on the need for an implementation period which stretches from the end of the UK’s membership in 2019 to a period when the new relationship can be broadly established.
“Not only will this be a sensible way of delivering such a momentous change for both sides, if agreed early it provides the option for the firms most affected by Brexit not to take swift decisions in 2017 on scaling back UK operations,” said Evans.
“A clear commitment that it will seek an early agreement [with our European partners] on a high level transitional implementation period which will help avoid economic shocks to both the EU and UK. This is in both sides’ interest, would not be a sign of negotiating weakness and is essential if we are to maximise the smooth running of the financial system after 2019.
Evans said that the association believes that without such a commitment there is “little incentive for insurers considering relocation to take a longer term view on whether to press ahead with a decision”.
The five key asks agreed by the ABI board and set out in September are:
- Securing a regulatory environment that is appropriate for the UK market.
- Retaining the ability to passport out of and into the UK.
- Closely mirroring the EU data protection regime to avoid a quagmire of complexity around how personal and non-personal data is protected.
- An improved future migration policy that enables the employment of high-skilled professionals from both within and outside the EU.
- A strong focus on regulatory dialogue and international agreements in overseas financial services markets, especially in India and China.
‘No special treatment’
Earlier this week, as reported, Chancellor Phillip Hammond and Brexit secretary David Davies held a meeting with key City bosses at the Shard in London and steadfastly refused to give the banking, insurance and investment sectors any ‘special treatment’ in any Brexit negotiations.
Attendees at that meeting leaked details of the conversations including, perhaps rather worryingly for the industry, that the UK government was perfectly prepared to risk losing UK’s vital passporting rights within the EU and see business flow out of London and into financial centres in Paris, Frankfurt and Dublin.
One City boss that wished to remain anonymous reportedly told The Daily Telegraph: “The message was: ‘You’re not the only sector. You’re a very important sector but you’re not the only sector and so what we have to do is to understand how we factor in your needs along with the needs of the other sectors in the country’.”