British insurers are activating Brexit contingency measures as time runs out for the UK and European Union to adopt legally binding transition plans.

A report from Kennedys Law says if the legal status of the UK’s exit is assured only next year, insurers will have to activate plans based on a “hard Brexit” outcome.

This will result in harsher economic impacts, the insurance law firm says.

One company has committed about $50 million to new IT infrastructure, relocation costs, hiring, regulatory authorisation and other fees.

Maintaining market access with EU trading partners remains the top priority for insurance companies, according to Kennedys.

The report says access to the EU’s single market is a major part of what makes the UK an attractive destination for investment from US insurers.

The industry consensus is that the UK will not maintain current market access under any post-Brexit trade scenario. At present, EU countries can access the UK market through a “passport” system

Many insurance companies are already moving parts of their businesses out of the UK, with Dublin the preferred location for many due to its sound financial regulation, common language and continued passporting rights as an EU member state.

Supporting legal and professional services may also relocate to Dublin.

Kennedys says Brexit will also lead to a research and development funding gap of €1.6 billion ($2.5 billion) in the insurtech and healthtech market.

The UK must regulate innovative technologies in a way that is not a barrier to EU market entry, the paper says.

Any bid to restrict the movement of graphic design, computing and technology professionals to the UK from the EU will affect the insurance industry’s ability to innovate, according to Kennedys.