International Underwriting Association lays out priorities for Brexit negotiations

London must maintain its existing freedoms for insurance services in order to hold its position as the largest global centre for commercial and specialty risk, according to the International Underwriting Association (IUA), which has devised four priorities for Brexit negotiations.

The priorities cover access to the single market, legal considerations, tax issues and uncertainty around the transition process.

Members of IUA’s legal and regulatory committee believe that any trade agreement between the UK and EU should first preserve passporting and branching arrangements and recognise the equivalence of regulatory regimes.

The IUA also believes that no barriers should be created that impede the use of English law contracts and standard London Market contractual forms in cross-European business.

“It will be important to provide clarity on which law UK courts will apply to contracts and to eliminate any doubts about the validity of contracts written prior to Brexit,” the IUA said.

Another Brexit priority is that tax issues must be addressed with an early indication of the future VAT (value-added tax) regime for insurance companies operating in the UK.

The IUA stressed that the UK and the EU should agree that consistency, fairness and transparency should apply for companies to any tax implications arising from Brexit.

The final priority laid out is that regulators will need to prepare to deal with an unprecedented increase in licence applications, as part of the transition process.

The association believes customer concerns about future arrangements for providing cover mean that insurers will be seeking to establish branches or subsidiaries both in the UK and various other European jurisdictions.

In order to minimise uncertainty, however, it would be desirable for the UK and the EU to reach an understanding at an early stage about where their discussion should lead.

Dave Matcham, chief executive of the IUA, said: “The London company market’s priorities for Brexit are quite clear. It is essential to maintain a level playing field so that insurers can operate across the continent without the need for local licences.

“At the same time, the competitiveness of London as a global hub will be preserved by allowing European firms to easily maintain a presence here through branch offices. The UK’s regulatory regime should remain equivalent to the EU Solvency II system and there should also be continued mutual recognition of portfolio transfer and data protection arrangements.

“Brexit negotiations will, of course, take at least two years and it is important to mitigate as much as possible the uncertainty that this process will inevitably engender. In particular, regulatory authorities, both in the UK and continental Europe, should work together to help insurers put smoothly in place whatever contingency plans are required to maintain client services.”