In June 2017, in this very publication, IUA’s Chief Executive, Dave Matcham, outlined the importance of a bespoke trade deal for financial services or, failing that, agreed regulatory equivalence to manage the post-Brexit UK/EU relationship. Unhappily, we currently have neither, so what are the implications for London market insurers providing cross-border (re)insurance and what has been the impact of Brexit on our customers in their day-to-day operations?

To combat the loss of EU passporting rights, most UK based insurers have adapted their corporate structures to operate via subsidiaries within an EU State, at least until there is a future agreement. The UK has also unilaterally declared that EU companies can continue operating in London as branches. For contracts requiring run-off following Brexit, the UK gives EEA insurers a 15 year period. Individual EU States have differing rules for UK insurers running off business but all ensure that insureds are not disadvantaged.

So, any disruption to contracts has been managed and largely limited to back office and operational complexities. The IUA has argued for an enhanced equivalence regime, based on Solvency II precedents, to cover large risks (including marine insurance). However, the EU has been unwilling to grant any insurance equivalence, citing the prospect of possible future divergence by the UK from its core rules. The prospect of a future agreement looks uncertain, but the two sides have at least committed to a Memorandum of Understanding that would allow regulators to share information and maintain an open dialogue. It is hoped this will be revealed by the end of March.

On the maritime sector the impact on shippers and supply chains of the expected delays at ports caused by border checks, increased paperwork and the availability of qualified staff has not yet flowed through into insurance claims and, thinking optimistically, may be short-lived. As always, the response of the cargo, freight forward or other relevant policies will depend on their specific terms – whether, for example, delay claims are excluded - and the specific policy trigger.

Ultimately, both the maritime and insurance sectors are sophisticated and truly globalised. Whilst Brexit provides regrettable barriers at a regional level, insurers remain well placed to overcome these difficulties and continue to provide bespoke, expert services to clients.