Insurance firms may be forced to leave the Irish market after vote
THERE are fears of reduced competition in the financial services market here after the Brexit vote.
This is because the decision has created huge regulatory uncertainty for British firms operating here under complicated EU "passporting" rules.
A huge number of UK-headquartered and regulated firms operate here in the banking and insurance market using the passporting rules.
This is based on an EU directive that allows firms registered in one EU state to offer services in another one by opening a branch in the other country, or offering services on a cross-border basis, without establishing a permanent presence.
A total of 92 financial services firms, giving the UK as member state of origin, are listed by the Central Bank as operating here under passporting rules.
Financial services firms that operate branches here and are prudentially regulated by the British authorities include Aviva, Nationwide UK (Ireland), specialist bank Investec and insurer Royal London.
Ulster Bank, which is owned by London-headquartered RBS, said it is regulated here by the Central Bank. Before the Brexit vote the Central Bank had warned of reduced competition in the insurance market from a Leave victory.
Motorists are already reeling from premiums rising by 60pc in the past two years.
The Central Bank said last week, in its 'Macro Financial Review': "UK firms doing business in Ireland, and Irish firms doing business in the UK, currently do so on the basis of the single market. A UK decision to leave the EU could result in it also leaving the single market, though not necessarily."
The regulator added: "Depending on the nature of the Brexit, if it were to occur, Irish insurers may face restrictions upon their ability to conduct cross-border business into the UK and, similarly, UK insurers operating in Ireland may face restrictions."
A spokeswoman for Ulster Bank said the vote won't affect where RBS operates, and its "strategy remains a bank focused in the UK and Ireland".
"Ulster Bank in the Republic of Ireland is regulated by the Central Bank of Ireland and the European Central Bank."
Aviva said it underwrites general and life insurance risks in Ireland from the UK under the EU freedom of establishment rules. "A vote to leave does not result in any immediate impact on these arrangements.
"Longer-term, the extent to which any structural changes are needed will depend on the nature of the ongoing relationship the UK negotiates with its EU partners," it said.
Insurer Royal London said it was authorised by the prudential regulatory authority in the UK and regulated by the Central Bank here under conduct of business rules.
UK-based group chief executive Phil Loney said: "Following yesterday's EU referendum in the UK we have entered a period of uncertainty and short-term market turmoil. Ireland remains in the EU and remains an attractive market for Royal London.
"Royal London is fully committed to the Irish market, to our business in Ireland and its future growth. We will continue to serve Irish customers and invest in the growth of Royal London Ireland."
Asked what will happen financial services firms operating here under passporting rules, a spokeswoman for the Central Bank said: "The eventual impact of the UK referendum on this specific matter will become known in the months ahead."