3 June 2016
Brexit poses a grave threat to London insurance
jobs and business, market leaders declare
The International Underwriting Association of London (IUA), Lloyds, and Richard Brindle, group chief executive officer of Fidelis, today warned of job losses and a significant risk to business in London’s insurance market if Britain votes to leave the EU.
In a position paper, the market leaders warn that:
• Job losses are highly likely amongst the 34,000 people employed directly in the city’s commercial insurance sector
• Further job losses are likely among the tens of thousands indirectly employed
• Underwriting companies are already making contingency plans to move elsewhere if Britain votes to leave the EU
• Foreign capital is likely to leave for more trade-friendly jurisdictions.
The paper highlights that insurance companies that stay in the UK following a vote to leave will continue to be subject to EU regulatory standards, but without any say in how they were formed; those companies will be also be forced to re-arrange cross-border insurance trade deals with almost all significant continental markets.
Dave Matcham, chief executive of the IUA adds: “Feedback from our members clearly shows that the benefits of EU membership are highly valued and the possibility of these advantages disappearing is of grave concern. An IUA member survey shows at least six firms would reconsider the legal status of their London operations in the event of a leave vote, though there may be others. Passporting rights within the single market are particularly important, ensuring that firms are not obliged to maintain expensive capital holdings in each of the EU member states in which they operate.”
Inga Beale, Chief Executive of Lloyd’s comments: “Lloyd’s sits at the heart of the London insurance market and it is the global scope of our activities, the framework that we provide to transact insurance business across the EU and the rest of the world that attracts the industry’s leading talent and most committed investors to London. Lloyd’s firmly believes that to remain part of the EU is in the best interests of the Lloyd’s market and of the wider London insurance market, which contributes £12bn to the UK economy and employs over 34,000 people in London alone.”
Brindle says: “London has centuries of insurance history, and remains the world’s leading insurance market, largely because it is outward-facing. It attracts foreign investment because companies in Britain can access the EU and the global market through a single operation. Brexit would jeopardise our leading position, and bring no advantage from any perspective, whether regulatory, economically or for our reputation. It’s highly likely that if we were starting a business post a Brexit vote, we would be headquartered elsewhere in the EU.”
About The IUA
The International Underwriting Association of London (IUA) represents international and wholesale insurance and reinsurance companies operating in or through London. It exists to promote and enhance the business environment for its members.
The IUA’s London Company Market Statistics Report shows that overall premium income for the company market in 2014 was £22.943bn. Gross premium written in London totalled £15.855bn while a further £7.079bn was identified as written in other locations but overseen by London operations.
The statements expressed in this media release are representative of the results of a survey of IUA companies, informal interviews with members and discussions held by the IUA Board. They do not necessarily represent the personal views of individual board members.
Lloyd's is the world's specialist insurance and reinsurance market that offers a unique concentration of expertise and talent, backed by strong financial ratings and international licences. It is often the first to insure new, unusual or complex risks, providing innovative insurance solutions for local, cross border and global risks. Its strength lies in the diversity and expertise of the brokers and managing agents working at Lloyd’s, supported by capital from across the world. In 2016, more than 90 syndicates are underwriting insurance and reinsurance at Lloyd's, covering all lines of business from more than 200 countries and territories worldwide. Lloyd's is regulated by the Prudential Regulatory Authority and Financial Conduct Authority.
About Richard Brindle
Before establishing Fidelis, Richard was the driving force behind Lancashire, the global insurer, founding the company in 2005 and acting as CEO until April 2014. Lancashire’s innovative and rigorous underwriting approach meant it consistently outperformed its insurance peers. Richard’s insurance career began in 1984 at Posgate and Denby Managing Agency at Lloyd’s, and since then has included spells at Syndicate 488, Charman Underwriting – where he was the main underwriter – Tarquin Underwriting from 1991 to 1998, and Ascot Underwriting Agency, where he was a non-executive board member.