Talking Brexit at BIBA

I’m back at my desk after another busy BIBA conference where it was great to see so many familiar faces.

The highlight for me was being involved in a thoughtful panel discussion alongside LMG chair, Nicolas Aubert, and Aviva's Phil Bayles about the implications of Brexit, and how the sector needs to make its challenge clear to the UK’s negotiators.

As we head into this post-Brexit era, we need very strong regulatory cooperation with the EU authorities. Whatever the political framework that is ultimately agreed, the market cannot work effectively without regulatory cooperation; whether it's to make an equivalence arrangement work, or frankly whether it's just to make the market work, full stop.

These are interconnected markets and they have been that way for a long time. From a UK perspective, and particularly for the London Market, the contracts that have been written, and that will continue to be written, rely on a degree of sophisticated regulatory cooperation. My sense from talking to European regulators over the past few months is that they very much want a way to keep the UK in the room, but the UK won't be in the room automatically any more.

Part of the political agreement has to be to provide the cover for our regulators to maintain a close and engaged relationship with their European counterparts that can work both at a high level in terms of the policies that are developed and the frameworks that are put in place, but also on a day-to-day basis that enables the firms to interact with each other and make the market work.

The single biggest technical issue for this industry – the London Market, the personal lines market, and indeed for the long-term savings side of the industry - is what to do with existing contracts that have long-term liabilities that go beyond what any transitional agreement will be, and how companies will be able to service those contracts. In many continental markets the payment of a claim or the fulfilment of a claim can only be legally done if you are authorised to operate in that country.

At the moment this is done easily because the Single Market allows passporting in and out, so there are no barriers. But once we exit our members could be left in a position where they have contractual obligations to fulfil, which become impossible to do so legally if there is no clear strategy and regulatory framework. For example, a directors and officers insurance policy could see a claim ten years down the line and it may be illegal for our members to pay that claim in Belgium if they are not authorized to operate in Belgium.

We have to get a solution to enable that to happen so that those customers can be served going forward. That requires a political agreement and also a regulatory agreement and it needs to begin right now. It simply cannot be left until the last minute. That is something we will be communicating loud and clear to whatever new government is formed after June 8th.  

Last updated 12/05/2017