‘Minimal’ Insurance Effect If Scotland Exits U.K., Says Lloyd’s of London Chair

September 15, 2014

Lloyd’s of London Chairman John Nelson said several years of uncertainty will follow if Scotland leaves the U.K.

“The immediate effect would be a period of perhaps two years of uncertainty,” said Nelson, 67, in an interview from Monte Carlo today. “You’ve got the currency question, you have borrowing, does Scotland have to negotiate bilateral trade agreements with other countries in the world?”

Scottish residents will vote Thursday on whether the country will break away from a 307-year-old union with England. Polls suggest the result of the referendum is too close to call and if Scotland does secede it would be the biggest realignment of the political map of western Europe since World War II.

“None of it is likely to be positive for the Scottish economy,” said Nelson, who joined reinsurers and brokers in Monte Carlo this week to start talks on 2015 contracts. “The impact is macro economic, caused by the financial restructuring.”

Most businesses feel that breaking away is a mistake, he said. “Business is global while politics is becoming more and more local.”

A possible secession by Scotland will have minimal impact on the insurance industry or for the Lloyd’s market, he said.

“Scotland would just become another country we work in,” said Nelson. “A very small proportion of our U.K. business is Scottish and the likelihood is that” Lloyd’s will continue to provide cover.
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