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17 October 2017

Commercial Risk Europe: Risk transfer partners prepare for Brexit


Insurers and brokers are restating their commitment to the European and UK markets in the wake of Brexit negotiations, but with many issues still up in the air it remains a little unclear exactly how this will be achieved.

While Brexit negotiations between the EU and UK continue to stall, insurers continue to announce relocation plans for the post-Brexit era.

For example, XL Group has announced plans to move its EU headquarters to Dublin, while Chubb has opted for Paris as its alternative European base. Other insurers have made similar moves. Lloyd’s, QBE and Liberty Mutual have chosen Brussels; Markel has opted for Frankfurt; and AIG for Luxembourg.

Meanwhile, London continues to make bullish statements about retaining its status as the premier financial hub within Europe, even after its exit from the EU.

“Uncertainty remains the watchword for the coming months and years, as the actual process of Brexit is planned and executed – and alternative trading arrangements are negotiated,” said Enrico Bertagna, senior vice-president of the business development group at Allied World.

An insurer’s role is to help their clients navigate through these uncertain times and at least provide some certainty over their own status, he said.

“While companies are worrying about whether they will still be able to trade with their business partners, whether new tariffs make their products and services uncompetitive and whether they can still access the talent they need, they don’t want to be worrying about their insurance carriers,” he told CRE.

“Our planning for Brexit is at an advanced stage and our aim is to continue to support our customers without interruption,” said Andreas Berger, Allianz Global Corporate & Specialty (AGCS) board member responsible for Germany, Austria, Switzerland and the Mediterranean.

“For global entities, one of the major worries is whether their European programmes will remain seamless and operate in the same way as they have in the past. For existing contracts that have long-term liabilities it is hoped they could be ‘grandfathered’, so rights and obligations would not automatically expire.

“In such cases, risk managers have a critical role to play during Brexit planning. It is obvious that risk managers will be working on the front line alongside directors and boards to model and plan for Brexit scenarios. We will support their planning and preparation for the post-Brexit reality as much as we can,” said Mr Berger.

Unsurprisingly, brokers have been the most active when it comes to gauging risk managers’ Brexit concerns related to insurance or general business threats. Aon has built its Brexit Navigator, a scenario planning tool for “the risks and opportunities of the EU’s four freedoms – goods, services, capital and movement (people)”, explained Eddie McLaughlin, chief commercial officer at Aon Global Risk Consulting. “Concerns vary by country, industry sector and nature of business,” he said. “However, in general, two key concerns are around regulatory uncertainty – exporting, insurance licensing and supply chains etc; and the impact on people – retention, recruitment and staff costs.”

Brokers are also heavily involved in lobbying efforts. Nicolas Aubert, who heads up Willis Towers Watson’s UK business, is chairman of the London Market Group. In addition, Willis Towers Watson is contributing to government consultations and has established a Brexit taskforce of senior leaders.

There has been some lobbying of the UK government from a number of insurance industry bodies, such as the Association of British Insurers and insurance buyer association Airmic, said Mr McLaughlin.

Full article on Commercial Risk (subscription required)



© Commercial Risk Europe


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