The long-term effects of Brexit could lead to a drift away from the London insurance market, and the potential creation of a new hub elsewhere in Europe, according to an insurance lawyer.
As the UK insurance industry
puts plans in place ahead of the country’s anticipated exit from the European Union, many insurers have revealed plans for post-Brexit bases on the continent.
Over time, such moves could lead to the emergence of a new European insurance hub, Mathew Rutter, insurance advisory partner at law firm DAC Beachcroft, told Insurance Business.
“At the moment the market feels confident and resilient,” Rutter said. “The plans that most insurers are putting in place don’t generally require significant numbers of people to go to Luxembourg, Brussels, Ireland, and indeed I think that’s been one of the attractions of Luxembourg – the fact that there isn’t a requirement to have huge numbers on the ground.”
Most of the work that happens in London will stay in London for the short-term, according to Rutter, but there is a “potential risk” for a shift away from the hub over time.
“If you’ve got lots of insurers together in Luxembourg, then they’ll meet and talk to each other in Luxembourg,” he said, and if businesses’ senior management are seen to be spending more time in a new hub, overseas bodies and regulators are likely to sit up and pay attention: “You can see that over time that might start to ratchet up a bit.”
“Over time you can see a drift possibly, whether that’s to Luxembourg or somewhere else in Europe, it could start to happen,” Rutter said. “And there would be a number of member states that would be very keen to see that happen.”
However, he stressed that such changes wouldn’t happen “overnight.”
“When you’ve got a centre of insurance expertise as we have in London, that’s not going to suddenly disappear. But you can see a risk that over time, the force of gravity, as it were, will gradually pull more of the decisions to be taken in other European centres.
“It’s certainly a risk that you wouldn’t have had on one’s radar even a couple of years ago. But I don’t think people need to be worrying too much just yet as to whether they’re going to lose their jobs, or have to move to Luxembourg or somewhere near there. It’s probably over generations that you’re talking about for that kind of change.”
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