Insurance industry urges Brexit free trade agreement

London market wants deal similar to that between the US and EU

Insurance industry urges Brexit free trade agreement

Insurance News

By Terry Gangcuangco

Last week we told you about the crystal-clear message sent by European Union chief negotiator Michel Barnier to the UK. His speech, delivered in Brussels, left no room for doubt as to where the EU stands, as far as the Single Market is concerned, in relation to Britain’s exit.

“Those who claim that the UK should ‘cherry-pick’ parts of the Single Market must stop this contradiction,” said Barnier, who stressed that the UK’s decision to leave means the loss of its Single Market benefits. Now a British trade association is proposing a free trade deal.
“Our proposal offers clear mutual benefits to clients on both sides of the [English] Channel, and creates a workable solution that would mean that neither the EU nor the UK would have to sacrifice market access or control over their respective regulatory regimes, solving the access versus control dilemma,” said Malcolm Newman of the London Market Group, as quoted by the Financial Times.
According to the report, the proposed agreement is similar to that between the US and the EU. That deal, called the covered agreement, essentially removes certain trade barriers.

“Our goal is to ensure that clients are not left in a situation where there is contractual uncertainty and protection gaps post Brexit,” added Newman.

In his response to a letter from Treasury Select Committee chair Nicky Morgan, Chancellor Philip Hammond previously said: “The Government is alive to the risk that the UK’s withdrawal could, in some cases, create legal uncertainties as to the status of existing cross-border insurance, pension, and other financial services contracts sold under passporting arrangements.”

In August the Association of British Insurers (ABI) warned of legal issues surrounding millions of insurance contracts.

“If the contracts are not grandfathered as proposed, insurers may not be legally able to compensate without a replacement agreement,” said ABI director of regulation Hugh Savill.  

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