A.M. Best has analysed companies’ announcements as they provide details of their contingency plans to reassure their clients in the rest of the EU that they will continue to be able to provide insurance services after Brexit.
In a new Best’s Special Report, titled, “Location, Location, Location – Insurers Unveil Choices for European Offices,” A.M. Best notes a number of market participants have taken decisive action by announcing the formation of new EU subsidiaries in order to ensure there is no interruption to the insurance services they provide to European clients.
Catherine Thomas, senior director, said: “A.M. Best’s analysis of company announcements over the past few months reveals that Ireland, Luxembourg and Belgium have been among the most popular domiciles. However, while these three domiciles are emerging as key locations, no single city necessarily features as a major European insurance hub. Instead, domicile choice has been driven by the specific considerations of individual insurers.”
The report notes that considerations when selecting a location have included proximity to clients, the ability to attract talent and the existence of a branch in a particular location, as well as the local tax regime. In addition, the local regulator is important – particularly its approach, expertise and accessibility – as it will determine the speed at which an insurer is able to establish a new company, as well as the nature of its future operating environment.
The research also states that as different European cities become centres of new activity, there is concern that London’s position as a leading insurance centre could be threatened. Yvette Essen, director, research and communications, and author of the report, said: “While it is very early days, A.M. Best expects that London will retain its status as one of the world’s leading insurance centres and an important insurance hub, given its pool of underwriting talent and reputation for flexible underwriting. London has attracted talent and expertise from around the world, and is innovative, leading the development of new product lines such as cyber insurance.”
A.M. Best does not expect to take any rating actions as a direct consequence of plans for the United Kingdom to exit the EU, although economic and regulatory uncertainty, together with the prospect of higher barriers to trade, means that Brexit overall is likely to have a negative impact on the industry.
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