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Underwriters foresee huge premium lost from Brexit

Britain’s European Union exit could affect £7.3 billion ($11.67 billion) of premium written in the London company market, the International Underwriting Association (IUA) estimates.

The IUA – which represents non-Lloyd’s international and wholesale insurance businesses operating in the London market – includes the estimate in its annual statistics report.

The figure comprises European premium received by companies headquartered in London and business written by companies based outside the EU with offices in the UK capital.

On the other side of the coin are companies in Europe that use EU “passporting” arrangements to write London market business.

IUA CEO Dave Matcham says the data shows the importance of an open trading relationship between the London market and Europe.

“It is vital that a level playing field is maintained, so companies can operate freely without any need for local licences, regulatory collateral obligations or other special requirements,” Mr Matcham said.

UK Prime Minister Theresa May says the Government will initiate formal talks on its departure from the bloc by the end of next March, after the pro-Brexit campaign won the June referendum.

The IUA and other industry bodies are working to highlight insurance issues before final details are thrashed out.

Mr Matcham says many businesses rely on London’s EU access to cover risks across Europe, and it also enables overseas companies to write, via branch offices, risks that flow to London from across the world. “It is the concentration of all this expertise that makes the London market a unique international insurance and reinsurance hub.”

Overall London company market premium was £21.6 billion ($34.6 billion) last year, down from £22.4 billion ($35.8 billion) in 2014, according to the IUA report.

The figures include premium written in London and business in other locations that was overseen by London operations.

Australasia accounted for £663 million ($1.1 billion) last year, down from £785 million ($1.3 billion) in 2014. 

Competitive market pressures, increased use of Lloyd’s platforms, company reorganisations and exchange rate fluctuations are among reasons cited for the overall decline.