A Brexit would damage London’s £30bn insurance market, Lloyd’s of London has claimed.
Sean McGovern, chief risk officer and general counsel at Lloyd’s, said today that “exiting the EU will create a level of uncertainty, for Lloyd’s, for the London market, as well as the UK and European economies, we have rarely experienced”.
London’s insurance market controls more than £60bn of gross written premium.
It contributed £30bn to UK GDP in 2013, which is 21 per cent of the total GDP contribution of the City and eight per cent of total London GDP, according to a report by the London Market Group and The Boston Consulting Group.
“The UK’s membership of the EU has been part of that success story and we believe that it will be key to our future growth and development as we deal with competition from other insurance centres around the world,” said McGovern.
“When looked at from the London insurance market’s perspective, UK membership of the EU confers three very important benefits: it provides us with access to the single market; it encourages foreign direct investment; and it facilitates trade with countries outside of the EU.
“These benefits are, in my view, critical to the success of the London insurance market and its position as the world’s largest specialist insurance and reinsurance centre.”
The single insurance market, which operates under Solvency II regulation, means that Lloyd’s underwriters can work in all the other 27 member states while the EU passport system eases access across the market, McGovern argues.
“Brexit does not offer a route to insurance regulatory nirvana,” he said. “The UK regulatory system has been largely driven by domestic political and regulatory concerns since the financial crisis.
“The Bank of England has made it clear that it will not be held back by Brussels if it feels that UK financial stability requires it to be more conservative and require more capital than EU Directives. “The new senior management regime we are all implementing and the new focus on conduct regulation are domestically driven and cannot be blamed on Brussels.”
There is some debate over whether Solvency II is good for the UK’s insurance industry, with some arguing that it is costly and cumbersome.
A referendum on the UK’s membership of the EU could be held as early as 23 June.