London market supports EU trade agreements
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The London Market Association on Thursday said it supports a U.K. Parliament report calling for trade agreements to avoid disruption to business brought on by Britain’s planned exit from the European Union.
“The LMA supports today’s Treasury Committee report and will continue to lobby government directly and via the LMG and Lloyd’s,” the association said in a statement. “Without appropriate transitional arrangements, clients will be left with no certainty as to how their contracts will be serviced post-March 2019.”
A Dec. 14 report from the Treasury Committee of the U.K. Parliament, Transitional Arrangements for Exiting the European Union, lays out by industry the difficulties that could occur should trade agreements not be reached.
The paper states that the British government is seeking a “bold and ambitious free-trade agreement” that achieves “the freest and most frictionless trade possible in goods and services in place of a trade relationship based on participation in the Single Market and EU Customs Union.”
Markets could see disruption should a trade agreement not be reached — a “no-deal scenario,” the paper said.
“In a ‘no-deal’ scenario, banks and insurers based in the U.K. would lose the legal authorization to serve clients in the rest of the EU, either on a cross-border basis or through foreign branches,” the treasury paper said.
This could affect even the most basic operations of the insurance sector.
“A ‘no-deal’ scenario could also cause discontinuity in cross-border insurance and derivatives contracts that straddle ‘Brexit day,’ since companies will no longer legally be able to collect premiums or pay claims, in the case of insurance contracts,” the Treasury paper said.
Many insurers are taking steps to ensure business continuity. Most recently, Liberty Specialty Markets, a London-based unit of Liberty Mutual Insurance Co., said it will redomicile from the U.K. to Luxembourg in preparation for Brexit.
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