The London Market Group (LMG) has proposed a free trade agreement to allow post-Brexit mutual market access for the UK and EU insurers and reinsurers.
The idea is to retain control over their respective regulatory systems, once the UK leaves the European Union (EU).
At the core of the LMG’s proposal is the need to allow clients an uninterrupted access to the expertise and specialists in risk capacity in the UK’s capital.
This, as per LMG will ensure that neither the EU nor the UK will have to sacrifice market access or control over their regulatory systems.
The free trade agreement (FTA) can permit mutual market access to recognition of both the EU and the UK’s prudential regimes, with a Solvency II equivalence outcome built into it.
The proposal also includes a recommended framework for supervisory cooperation, which can align regulatory oversight of (re)insurers and brokers/intermediaries in both the EU and UK.
LMG also stated that this proposal is not something new to the EU. But in fact, it builds on the bilateral agreement between the EU and the US that came into force in early November, for reinsurance business.
The agreement lets the EU and US reinsurers to operate in each other’s jurisdiction, without the need for a local presence and it aligns their regulatory systems via a mutual regulatory cooperation and collaboration agreement.
It has suggested a complementary transition period which can offer continuity of client service by allowing the London Insurance Market to operate as if the EU status is preserved until the time the FTA is agreed.
SCOR EMEA Hub managing director; International Underwriting Association chairman and sponsor of the LMG’s taskforce Malcolm Newman said: “Our proposal offers clear mutual benefits to clients on both sides of the Channel, and creates a workable solution that would mean that neither the EU nor the UK would have to sacrifice market access or control over their respective regulatory regimes, solving the
access versus control dilemma.
“The London Market plays a vital role in pooling risk across the EU and UK markets, and we are all focused on ensuring continued access to the broad range of insurance services, expertise and capital that we offer to EU businesses. Our goal is to ensure that clients are not left in a situation where there is contractual uncertainty and protection gaps post Brexit.”
Image: LMG submits new proposal to the UK Government over insurance market post Brexit. Photo: Courtesy of Stuart Miles/FreeDigitalPhotos.net.