LONDON (Reuters) - Britain should seek “equivalence” based market access to the European Union for the reinsurance market after Brexit, insurance lobby group London Market Group (LMG) said on Monday.
Equivalence refers to the EU granting market access for a foreign financial firm if it determines that the firm’s home rules are equivalent, or aligned closely enough, to regulation in the bloc.
“An EU determination of reinsurance equivalence under Solvency II is vital in case a future agreement does not provide adequate EU market access for UK-based reinsurers,” the group, which represents commercial insurers in the Lloyd’s of London market and elsewhere in Britain, said in a Brexit update.
The UK should secure the agreement as soon as possible after Brexit, the LMG said.
Britain and the have already agreed in principle that equivalence should form the basis of future EU financial market access.
Britain and the United States signed an agreement on insurance and reinsurance last year, to make cross-border business easier after Brexit.
Existing equivalence tests should be strengthened and their scope extended, the LMG added, as current arrangements could make it more difficult for UK and EU-based brokers to operate in one another’s jurisdiction.
Lloyd’s has opened a subsidiary in Brussels and other UK-based commercial insurers have opened subsidiaries in Dublin, Brussels and Luxembourg to cope with a no-deal Brexit.
There was little appetite among the LMG’s members for “regulatory upheaval” after Brexit, the group said, adding that the consequences of a no-deal Brexit would be “significant”.
Reporting by Carolyn Cohn and Huw Jones; editing by David Evans