Lloyd’s, the specialist insurance and reinsurance market, announced it will set up a European insurance company in Brussels in preparation for the UK’s exit from the European Union.
The Brussels’ subsidiary will aim to be ready to write business for the Jan. 1, 2019 renewal season, subject to regulatory approval, said Lloyd’s Chief Executive Inga Beale.
As members of the EU, UK-based insurance companies are currently allowed to write business all over the EU, using passporting, which permits companies to operate without the need for additional licensing or authorization from each individual country, a process that can be lengthy and costly.
By setting up a Brussels-based company, Lloyd’s will be able to write risks from all 27 European Union and three European Economic Area states (Iceland, Liechtenstein and Norway) after the United Kingdom has left the EU.
“It is important that we are able to provide the market and customers with an effective solution that means business can carry on without interruption when the UK leaves the EU,” said Lloyd’s Chief Executive Inga Beale.
“Brussels met the critical elements of providing a robust regulatory framework in a central European location, and will enable Lloyd’s to continue to provide specialist underwriting expertise to our customers,” she added.
Fewer than 100 employees will be located in Brussels, said a Lloyd’s representative, explaining the office will be staffed by a combination of local hires, transfers and secondments.
Lengthy Brexit Negotiations
The UK government triggered Article 50 on March 29, which starts the clock ticking on negotiations to exit the EU – at least a two-year process.
The UK will remain a full member of the EU until Brexit is finalized, and, therefore, Lloyd’s said, “there is no immediate impact on existing policies, renewals or new policies, including multi-year policies, written during this period of time.”
“It is now crucial that the UK government and the European Union proceed to negotiate an agreement that allows business to continue to flow under the best possible conditions once the UK formally leaves the EU,” Beale went on to say.
“I believe it is important not just for the City [of London] but also for Europe that we reach a mutually beneficial agreement. We stand ready to help and support the government as best we can.”
American International Group decided in early March to move its EU headquarters to Luxembourg, in preparation for Brexit. Beazley Plc plans to turn its Dublin-based reinsurance operation into an insurance subsidiary, while other London market insurers and Lloyd’s insurers are planning similar moves to major EU financial centers.
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