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Life after Brexit for the UK and Gibraltar insurance industries

Life after Brexit for the UK and Gibraltar insurance industries | Insurance Business

Life after Brexit for the UK and Gibraltar insurance industries

#ThinkGibraltar is the name and the mission statement of a recent initiative which aims to highlight the special relationship between the UK and Gibraltar and celebrate the long-standing reciprocal market access between them.

Though 96% of Gibraltar voted to remain in the EU during the 2016 Brexit referendum, Gibraltarian Minister for Digital and Financial Services, Albert Isola, speaking at a recent event in London, said: “We are democrats. We accept the decision and will work with the United Kingdom to make the best of Brexit.”

With approximately one in four UK motor insurance policies provided by Gibraltarian companies and 92% of Gibraltar’s financial services business in the UK, the fate of both jurisdictions is intrinsically linked. This unique relationship is being protected and preserved by new legislation, including a new UK Financial Services Bill which guarantees continued market access on a bilaterally agreed basis between Gibraltar and the UK, without restricting Gibraltar’s regulatory autonomy in financial services.

Speaking at the same event, director general of the Association of British Insurers (ABI), Huw Evans said: “We are very fortunate to have worked with the support of the Gibraltar government over many years.”

Evans stated that 22 Gibraltar-based firms currently hold membership with the ABI and the ABI is proud to maintain a close working relationship, not only with these firms but also with the Gibraltar Insurance Association and the Financial Services Commission.

Brexit is the word on everyone’s lips when it comes to current affairs and Evans detailed how, in Gibraltar as in the UK, insurers are restructuring several of their operations to ensure that they can still serve customers within the EU, in the event that market access is not part of any long-term agreement reached.

With the creation of at least 35 new subsidiaries set up across the EU so that insurers can continue to service these customers, Evans said: “UK firms have taken significant efforts to respond to this changing relationship.”

Evans indicated the scale of this operation by detailing the issuing of over 400,000 green cards to customers by UK insurers to ensure minimal disruption to services.

“As a trade body, we have worked very hard since the 2016 referendum to ensure that the key risks were addressed and our members were well advised,” he said.

Contract continuity was a major area addressed by the UK which quickly established a temporary permissions regime for inbound firms after the 2016 referendum.

Evans stated that, following many representations from the ABI and Insurance Europe, EIOPA recently confirmed that all national regulators across the EU comply or intend to comply with EIOPA’s recommendations on the UK’s withdrawal from the EU, ensuring that the interests of policyholders are protected.

Looking to the future, however, Evans said, “While we as a sector are as well prepared as possible, we have to keep reminding ourselves that any withdrawal agreement is just the first stage in the longer process. It’s the agreement of the future economic relationship that we will have to live with for decades to come.”

The insurance sector in both the UK and Gibraltar, Evans stated, faces an unacceptable risk that it may end up in the position where, as it absorbs responsibilities previously managed by EIOPA, it is left in a position where it is obliged to “adopt rules designed by our competitors with no formal ability to influence how those rules work.”

“[UK and Gibraltar] regulators must be able to shape a regime that works for our market,” he said. “This is the test the ABI…will apply to any proposals for a future relationship on financial service between the UK and the EU.”

Evans stated that there is no guarantee that politics in the UK will be any more predictable after the upcoming election or even after the terms of the Brexit withdrawal have been resolved.

“There remains considerable work to do to establish, not just the shape of the UK’s post Brexit trading relationships with the European Union, but with the rest of the world as well,” he said.

Despite the work to be done on building these connections, however, Gibraltar maintains its “fiercely loyal and close relationship with the UK” and the link between these jurisdictions appears stronger than ever.