'Insurance industry is not ready for Brexit'
The European Union should not try to block UK financial firms selling services into the single market, including Ireland, after Brexit, said the deputy governor of the Central Bank.
The warning, delivered in a speech yesterday, contrasts with a push elsewhere in the EU including at the Commission, to restrict the so-called City of London banks, insurance and financial clearing sectors' access to the common market after the UK leaves the EU.
Central Bank deputy governor Ed Sibley said that after the UK itself, Ireland will be the EU member most affected by Brexit. He highlighted, in particular, risks to the funds industry and to Irish insurance customers if there was "hard or chaotic Brexit" that saw UK and Gibraltar-based insurers cut off from customers here.
The insurance sector itself remains "astonishingly" unprepared for Brexit, he said.
"Without action, there are risks that UK and Gibraltar-based insurers passporting into Ireland will lose their ability to continue to provide insurance cover, including collecting premiums, making mid-term alterations and negotiating and settling claims on any outstanding insurance contracts - ranging from long-term life insurance policies to annual motor insurance contracts - taken out prior to the UK's departure from the EU."
The Central Bank recently asked all the insurance companies it supervises about their Brexit preparations, he said.
Of the 197 responses received, 38 said Brexit would have a high impact on their business model and 12 a medium impact.
"The remaining 147 - almost three-quarters - think Brexit will have little or no impact on them. Given the level of uncertainty and the range of challenges we have heard about today, this is an astounding number," he said.
European regulators yesterday warned all finance firms and their customers to take timely action to plan for Brexit. "Contingency planning should consider timely responses to all potential challenges, such as contract continuity and possible relocations," said a joint report from the EU's banking, insurance and markets regulators.
Here, Mr Sibley said retaining cross-border activity between the UK and Ireland should be a goal in Brexit talks.
"From an economic and regulatory perspective it is desirable, that some form of sustainable link between the EU and the UK is found. It is important the EU continues to play an active and engaged role in international financial markets and does not introduce barriers to well-functioning markets where key risks can be managed appropriately," he told an event organised by the DCU Brexit Institute.
"As regulators, we see enormous challenges ahead, both for ourselves and for the firms that we supervise," he said.