Thebody representing London insurers in the commercial market has stressed theimportance of transparency around Brexit negotiations.
NicolasAubert, chairman of the London Market Group, on July 26 appealed to Britishpoliticians to keep the industry informed of the progress of negotiations withthe EU, following the U.K.'s voteto leave the bloc June 23.
"[We]have to get this message across to the politicians and the negotiators: Theycan't simply wait to the end of the process to tell us what they've agreed, wedo actually need to know what they've tried to negotiate, what they think thechances are, and what actions we should take to mitigate risk," he said."It's a very unclear, complicated situation." Theofficial process to exit the EU is expected to take two years after Article 50of the Lisbon Treaty is triggered, the timing of which is uncertain.
Pro-Brexitcampaigners had urged voters to "take back control," but Aubertwarned in a webinar hosted by publication InsuranceDay that for U.K. insurers, a tough regulatory environment is likely toremain a fact of life.
"Somepeople say that by leaving the European Union we could have a lighter-touchregulatory environment," he said. "We have to have a word of cautionthere because we do wish to retain equivalence under Solvency II, so that meansthat the rules themselves have to be fundamentally the same."
Thepan-European insurance regulatory regime Solvency II came into force on Jan. 1after years in the making, with significant input from regulators in the U.K.,the EU's most significant insurance hub. In order to trade as easily withEuropean insurers following a British exit from the EU, however, the U.K.'sregulatory regime would have to be deemed equivalent to Solvency II, experts say.
Auberturged U.K. politicians not to underestimate the power of their negotiatingposition, particularly when demanding the maintenance of so-called"passporting" rights — which currently give U.K.-regulated financialservices firms the right to sell products on the continent with minimal localregulatory interference.
"Let'sremember that it's not going to be only the U.K. that is going to ask for things[during the negotiations over the terms of Britain's exit]," he said.
Aubertalso said the industry has a responsibility to "[help] the governmentfigure out how passporting is also generating a value for the continent."
Britain'sofficial Brexit negotiations will be led by David Davis, a Leave campaignerappointed to the newrole of secretary of state for exiting the EU by the U.K.'s new prime minister,Theresa May.