LONDON (Reuters) - Global reinsurers have written to the European Commission to ask it to ensure mutual access between British and European Union reinsurance markets after Britain leaves the bloc due to worries about market disruption, according to extracts from the letter seen by Reuters.
Britain and the EU started talks this week on the terms of their divorce in March 2019.
Brexit risks an end to so-called passporting rights, through which financial institutions are able to sell their services across the EU without locally regulated operations.
Reinsurers such as Munich Re (MUVGn.DE) and Scor (SCOR.PA), who help insurers pay for big claims like hurricanes in exchange for part of the premium, technically do not need passporting rights to operate cross-border in the large marine, aviation and transport sectors.
But without regulatory regimes in Britain and the EU that are formally recognized as equivalent to one another, reinsurers based in Britain may have difficulty doing business in some EU markets due to differing national regulations, industry sources say.
Reinsurers outside Britain could also find it harder to get involved in deals led by the Lloyd’s of London [LOL.UL] market.
“The UK’s withdrawal from the EU raises difficult questions about the future trading relationship between the two jurisdictions,” the Zurich-based Global Reinsurance Forum, which represents some of the world’s largest reinsurers, said in the letter sent in April.
“If passporting arrangements for EU reinsurers into the UK and vice versa are not maintained, then national regulations will inevitably make cross-border reinsurance between the two jurisdictions more difficult and expensive.”
The letter called for existing arrangements to continue under a future UK/EU trade deal.
The reinsurers rejected suggestions by some industry participants that Britain should make major changes to EU Solvency II capital rules after Brexit, due to stringent capital costs and red tape.
“We strongly support the position that the UK should continue to operate an insurance regulatory regime which is consistent with Solvency II,” they said.
The Global Reinsurance Forum is chaired by Inga Beale, chief executive of Lloyd‘s.
Other members of the group of 13 reinsurers include Munich Re, Scor and Swiss Re (SRENH.S), as well as reinsurers based outside Europe.
Its main aim is “to promote a stable, innovative, and competitive worldwide reinsurance market,” according to its website.
Writing by Carolyn Cohn, additional reporting by Andrew MacAskill in London, Maya Nikolaeva in Paris and Tom Sims in Frankfurt, editing by David Evans