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London-Based Insurers Propose Industry-Focused EU FTA

by Jason Gorringe, Tax-News.com, London

29 November 2017


The London Market Group (LMG), a body that represents London-based insurance industry players, has released its proposal for a sector-specific EU-UK free trade agreement that would ensure market access for London's financial sector after Brexit.

LMG says its new detailed proposal for the UK Government sets out a mechanism that would enable the EU and UK to maintain access to their insurance markets and control over their respective regulatory systems once the UK leaves the European Union.

"At the heart of the LMG's proposal is the need to allow clients uninterrupted access to London's breadth of expertise and specialist risk capacity. It will ensure that neither the EU nor UK will have to sacrifice market access or control over their respective regulatory regimes," it said.

Its proposed FTA would be "a bespoke agreement that would permit mutual market access and recognition of both the EU and UK's prudential regimes - with a Solvency II equivalence outcome built into it. It would also include a recommended framework for supervisory cooperation, which would align regulatory oversight of (re)insurers and brokers/intermediaries in both the EU and UK."

According to the LMG, the agreement proposes a "prudential carve-out" and is not a new concept to the EU: "The solution builds on bilateral agreement between the EU and the US that came into force on November 7 for reinsurance business. This allows EU and US reinsurers to operate in each other's jurisdiction without the need for a local presence, and it aligns their regulatory systems via a mutual regulatory cooperation and collaboration agreement."

Malcolm Newman, Chairman of the International Underwriting Association, said: "Our proposal offers clear mutual benefits to clients on both sides of the Channel, and creates a workable solution that would mean that neither the EU nor the UK would have to sacrifice market access or control over their respective regulatory regimes, solving the access versus control dilemma."

"The London Market plays a vital role in pooling risk across the EU and UK markets, and we are all focused on ensuring continued access to the broad range of insurance services, expertise and capital that we offer to EU businesses. Our goal is to ensure that clients are not left in a situation where there is contractual uncertainty and protection gaps post Brexit."

TAGS: business | insurance | trade | European Union (EU) | services | Europe

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