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International insurance and reinsurance observers view the so-called Brexit vote as creating both challenges and opportunities for non-British underwriters.
Not surprisingly, much of the international reaction focused on how a British exit from the European Union would impact various aspects of regulation.
“The Brexit vote underscores the need for U.S. state and federal agencies to work together with our U.K. and European allies to smooth transition issues and achieve mutual recognition of each other's regulatory systems, removing unnecessary trade barriers,” Dave Snyder, Washington-based vice president of international policy for the Property Casualty Insurers Association of America, said in an email.
“The Brexit vote is a chapter, not the entire book,” said Mr. Snyder. “There is an opportunity for the U.S. industry and regulators to cooperate to fill any void and help elevate the stature of the U.S. as a global insurance center. Several things need to be done to accomplish that, including reversing regulatory overreach, strongly advocating for our system, and working closely together to resolve any issues with the E.U. and U.K. in a mutually beneficial way.”
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For the Reinsurance Association of America, concerns centered on the vote's effect on ongoing negotiations on covered agreements. Covered agreements are essentially treaties for the nation's treatment of cross-border reinsurance, which are sought by the RAA to prevent U.S. underwriters from being put at a competitive disadvantage.
“The impact of Solvency II and now Brexit has fostered some uncertainty for U.S.-based companies doing business in E.U. countries,” said Frank Nutter, president of the Washington-based RAA, in a statement. “In light of the Brexit vote, it is important for the covered agreement negotiations between the U.S. and E.U. to remain a top and immediate priority among all concerned parties. Such an agreement can resolve uncertainty and set a precedent for future regulatory agreements.”
The Association of Bermuda Insurers and Reinsurers issued a statement saying the U.K. vote will not affect Bermuda's Solvency II equivalence finding by the E.U.
In fact, the equivalence finding “will serve us well as the U.K. negotiates its multiyear transition out of the E.U.,” said ABIR President and Executive Director Brad Kading in a statement issued Friday.
“ABIR members will be reviewing corporate structures to determine what changes in their regulatory footprints may be necessary in order to conform with expected changes in European regulatory governance,” said Mr. Kading in the statement.
“Meanwhile we encourage the Bermuda government and the Bermuda Monetary Authority to continue their wise investment in bilateral relationships that lead to important legal agreements on tax cooperation and transparency; and recognition of robust BMA regulation that is in compliance with international standards. These essential actions are necessary to ensure we retain level playing field access to the world's markets.”
It remains unclear exactly how insurers and policyholders will be affected by the United Kingdom's vote to leave the European Union, but several key issues in the exit negotiations between British and E.U. officials, along with factors that could affect the status of the London market, will need to be addressed.