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The United Kingdom’s planned exit from the European Union is leading to significant uncertainty, not the least of which exists in the insurance industry.
Marsh Ltd.’s Bridge product, a 2017 Business Insurance Innovation Awards winner, is stepping in to address coverage gaps that may emerge due to the so-called Brexit.
Daniel Hearsum, head of placement, and Leslie Kurshan, leader of innovative client solutions for the U.K. specialty practice for Marsh UK, both based in London, were tasked with developing a solution to address insurance issues arising from the Brexit referendum in June 2016.
“As soon as it happened, we knew there would be dislocation in the market” and much uncertainty, Mr. Hearsum said. “We had to work out what is the fundamental problem: the loss of passporting rights should the U.K. leave the European Union. Passporting rights in Europe have been probably one of the most important parts of the European Union over the last 30 years. They’ve enabled insurers to insure across borders. It’s meant we haven’t had licensing problems across Europe for many years.”
While some insurers had serendipitously established domiciles in other parts of Europe previously, the majority do not have a solution to resolve passporting rights post-Brexit, he said.
“We felt market choice would be significantly hindered,” Mr. Hearsum said, adding that the broker wanted to ensure it could maintain options for its clients. “If you maintain choice, you maintain competition and that’s really what our role as a broker is.”
Marsh UK adapted a solution that has been used in Latin America and other regions where similar issues have required use of local fronting companies to deal with the uniqueness of the Brexit situation and ensure it would work from a legal and regulatory perspective.
But Mr. Hearsum said he anticipates the solution will need to continue to adapt as the Brexit negotiations proceed over the next 18 months and clients begin addressing any coverage gaps as they renew policies ahead of the March 30, 2019, withdrawal deadline.
“It’s not a stable product — it is something that will continue to evolve, which I think is very important,” he said.
Business Insurance’s Innovation Awards recognize the latest developments in risk management.