LONDON (Reuters) - Existing European Union insurance policies should stay in place after Britain leaves the bloc because the process of dividing them into British and EU contracts would be too complex, Lloyd’s of London Chief Executive Inga Beale said.
The Lloyd’s of London insurance market, which started life in Edward Lloyd‘s’ coffee house in 1688, derives around 14 percent of its business from Europe excluding Britain.
Life insurance contracts such as pensions can last for decades and transferring contracts to a different part of an insurance business or a different insurer would be time-consuming and unwieldy, Beale told Reuters in an interview.
“There’s no way we could get it done by the time (of Brexit), even if we started now,” Beale said.
“I don’t think there would be enough lawyers to do it all, and certainly not enough capacity in the courts.”
Britain and the European Union started talks on Brexit last week, with Britain due to leave the bloc in March 2019.
British finance minister Philip Hammond called last week for transitional arrangements to ease the Brexit process after that date. But Beale said transitional arrangements alone would not be enough for insurance contracts, where policyholders can also pursue claims years after a policy is taken out.
“It’s a big ask but we would like that all of these existing liabilities and contracts don’t have to be transferred ... they can be grandfathered.”
Grandfathering would mean that after Brexit, the rights and obligations afforded under financial contracts that were agreed before departure would not automatically expire.
Lloyd’s is setting up an EU subsidiary in Brussels in order to continue to operate across the EU after Brexit.
After Prime Minister Theresa May’s Conservative party failed to win a majority in British elections earlier this month, some politicians have called for a “soft Brexit”, including the possibility that Britain remain in the EU’s single market.
Beale said speculation of a soft Brexit would not affect Lloyd‘s’ plans because it was not clear what that would entail.
“We just don’t know what this definition of soft would mean,” she said.
Lloyd’s insurance market, which houses more than 80 syndicates in a landmark building in the City of London, is separately planning to cut around 10 percent of its current UK staff of 750, as it switches to a new operating model.
It intends to employ 10-20 people in Brussels, Beale said.
However, she said if Britain did retain access to the EU’s single market, the Brussels hub would likely not be needed.
“Fundamentally, if something does change, we can of course pull all that back.”
Reporting by Carolyn Cohn; Editing by Susan Fenton