Brexit Briefing: Insurers on move to UK and EU despite grace period deal
Lloyd's of London, AIG, Allianz and other insurers are ignoring assurances and establishing new hubs in Britain and the EU before Brexit in March 2019 to ensure access to customers. The moves come despite a "standstill" transition agreement struck between Britain and the EU which is meant to avoid any such hasty relocations.
"We have urged firms not to wait for and rely on a political process to deliver the answers. This is particularly true of relocation plans, which take two years or more to complete," Hugh Savill, of the Association of British Insurers, said.
Insurers are being driven by the fact that after Brexit, European firms selling policies in Britain, as well as British and other non-EU insurers with UK bases selling into Europe, will need to have local regulated entities. Many contacted by Reuters have said they are starting to implement the second phase of their Brexit plans - submitting licence applications, hiring and shifting policies.
"We are prepared for a hard Brexit," said Joachim Wenning, CEO of Germany's Munich Re, the world's biggest reinsurer, which has applied for UK licences. Such planning has been encouraged by EU regulators who say transition will not be ratified until October and could be derailed.
Services growth sluggish
The UK’s dominant services sector managed only a modest bounce-back in April after the previous month’s weather disruption, spelling further bad news for the broader economy.
The Purchasing Managers’ Index came in at 52.8, up on March’s 20-month low, but well below the average for the past year-and-a-half. Firms named ‘Brexit uncertainty’ as one of the factors weighing on the sector. Services account for 80pc of GDP. The Office for National Statistics estimated last week the overall economy grew by just 0.1pc in the first quarter of 2018.
EU grills UK on economic plans
Talks between UK and EU negotiators last week focused on the two sides' relationship on security and the extent to which Britain will be bound to the bloc's economic model.
The talks saw the EU press the UK for a precise vision for the type of economic model it wants after Brexit. It's worried that Britain will start cutting taxes, slashing regulation and using state aid to gain a competitive advantage.
The bloc will only offer a more generous divorce deal if the UK signs up to "level playing field" commitments.