(Reuters) -- Britain needs a new trade deal with the European Union which gives U.K. and EU insurers and reinsurers the right to operate across borders, an industry lobby group said on Thursday.

Many businesses in Britain are already looking at setting up subsidiaries in the EU to prepare for a “hard Brexit,” in which they would lose the right to sell goods and services across the bloc.

U.S. insurer AIG said this week it planned an EU hub in Luxembourg following Britain’s decision to leave the bloc, the biggest financial services firm so far to detail such a move.

Lloyd's of London is due to decide by the end of the month where to locate its EU subsidiary in the event of a loss of so-called passporting rights which allows it to do business in the EU.

Nicolas Aubert, chairman of the London Market Group, said an EU trade deal was “crucial,” with more than £8 billion ($9.72 billion) in insurance premiums from the European Union written annually in London.

The LMG was working with the British government to look for “existing precedents in current international agreements which could be used for the Brexit negotiations to support our industry,” Mr. Aubert said in a statement accompanying the group’s Brexit recommendations.

Banks, insurers and asset managers have given up on demands for full EU passporting rights after Brexit and are instead asking for limited market access for some sectors.

Insurers will decide by June 2017 where to set up EU subsidiaries to enable them to keep selling insurance across the bloc, given the process takes 18-24 months, the LMG said.

The London insurance market was also seeking a guarantee of regulatory equivalence with EU capital rules, the LMG said.

“We expect that the EU will not permit U.K. undertakings to carry on business in the EU if there is a fundamental divergence in regulatory standards,” it said.

Some insurers have said existing EU rules make it too expensive to invest in illiquid assets such as infrastructure. But the Bank of England has said the rules need tweaks rather than an overhaul.

The LMG also said it was seeking a transition period to implement any new arrangements post-Brexit, during which time U.K. insurers would keep single market access.