Ireland preferred post-Brexit for London company market

Ireland is the favoured location for London company market players wanting to secure access to EU customers after the UK leaves the EU, according to the latest London Company Market Statistics Report published by the International Underwriting Association of London (IUA).

The UK is set to leave the EU on March 29, 2019 but uncertainty around the nature of a potential deal that would allow mutual access to cross-border business is driving many insurance firms to create a unit within an EU member country.

Insurance firms have been working on implementing contingency plans to ensure continued client coverage for some time.

The IUA is aware of some cases where a transfer of business from London to continental parent companies has already begun, the report noted.

Ireland may be the top destination for setting up an EU base because many members of the IUA already have operations in the country, the report suggested.

Where firms do not already have a European base, Luxembourg is currently the second most popular destination. France, the Netherlands and Belgium have also proved attractive jurisdictions to London company market players.

The geographical breakdown of premium written in London shows that the share of income attributed to business originating in Europe (excluding the UK/Ireland) has fallen slightly to 16 percent from 18 percent in 2017, although the absolute value of premium from this region has increased from £2.78 billion to £2.96 billion, in line with the overall rise in premium for the company market this year.

Conversely, the amount of business overseen by London operations, but written elsewhere, shows a big increase in the proportion classified as European, the report noted. The Europe (excluding UK/Ireland) category is now a dominant 56 percent. It was the single largest geographical region for such premium in last year’s report, but accounted for a significantly lower share of 34 percent.

The value of controlled premium from Europe increased from £2.31 billion in 2016 to £4.48 billion in 2017. This jump of 94 percent is far in excess of any general rise in income observed across the London Market as whole, the report noted.

As more Brexit contingency plans are implemented, and new insurance entities are established across Europe in order to continue providing services post-Brexit, the authors of the report expect the amount of controlled business to grow further.