“Better safe than sorry” seems to be the mantra these days for financial firms, including insurers, in the UK – sticking to their contingency plans in terms of moving operations even with a transition agreement for the imminent departure of the country from the European Union.
“Most firms are yet to iron out all the finer details, but there is evidence to suggest they are continuing to make definitive decisions, with many recognising that the transition is not yet locked in, and may not be until very late in the day,” noted EY’s UK financial services leader Omar Ali.
According to the EY Financial Services Brexit Tracker, as of June 2018, 34% of the 222 companies being monitored have either stated their intentions or confirmed their plans to relocate part of their operations or workforce from the UK to elsewhere in Europe. Of those who have identified their destination, 21 firms have chosen Dublin – making the Irish capital the most favoured location so far.
Next to Dublin is Frankfurt, with 12 firms expressing this choice since the Brexit vote, followed by Luxembourg and Paris. According to EY, most of the firms which picked Dublin are asset managers while Frankfurt proves popular among banks.
As for insurers, EY had this to say: “Wholesale insurance is a heavily intermediated market, and many insurance brokers are expected to need subsidiaries in Europe to continue to service their EU clients. It is expected that more activity will be required in H2 2018.
“In addition, life and pensions firms are considering how they continue to service policyholders who have moved overseas – the so-called ‘migrating policyholder’ issue. This may result in a new flow of subsidiary applications to support contract continuity for impacted clients and firms.”
Ali commented further: “Until there is more certainty around key issues, such as the degree of access, movement of people, and cross-border contract continuity, we should continue to expect companies to make operational moves, and prudently stick to their original contingency plans.”
The EY executive believes that while worst-case scenarios now appear to be less drastic than initially feared, Brexit plans are finally becoming reality.