Brexit and Insurance
01 August 2016
There is much speculation around many aspects of the UK exit from the EU, and particularly in relation to London’s current global standing in finance and insurance.
Australian based Insurers have close relationships with both UK and European insurance through their reinsurance arrangements and brokers place many Australian risks into the London market.
One thing does seem clear at this point and that is that it will take some time for the separation to take place – up to 2 years according to some commentators – and probably business will continue to be transacted in the normal way until the effects of the change becomes clearer.
Lloyds, which has its own capital base, may be less affected and we assume Australian business will continue to be placed and renewed into the Lloyds market as usual. In the longer term, there may be increased competition between UK and European insurers which could have the effect of keeping premium rates competitive.
There is a reasonable consensus of industry opinion in Australia that the insurance and broking segments will be largely unaffected in the short to medium term and that the UK insurance market will successfully adapt to the changes – whatever they may be.
An article published in Corporate Risk and Insurance gives a good review of the question. Click here to read Aussie Insurance Industry Reacts to Brexit