Financial services were largely ignored in the post-Brexit trade deal between the UK and EU, with a simmering row over heavily restricted access to the bloc’s markets The London Market Group (LMG), a trade body representing over 350 underwriters and brokers in London’s specialist insurance market, is publishing a plan on how it believes its own sector can be significantly boosted. The five-point blueprint will outline how government and regulators can use reviews of insurance and financial services rules to inject massive momentum into the sector, which attracts more than $100billon (£70.6billion) a year in premiums for policies.
It is one of a number of industry bodies pushing for changes to strict rules following Brexit, with the Association of British Insurers previously calling for a reduction in capital requirements for its members.
Caroline Wagstaff, interim chief executive of the LMG, said Brexit provides the UK sector with the chance to “refresh and reinvigorate”.
She told the Financial Times: “It’s a moment in time when we can all step back, look at the environment and say, how can we do it better?”
One of the recommendations from the LMG calls for regulations of UK branches of overseas firms to be “scaled back”.
The trade body has argued for example, when the UK business of an insurer based in the European Economic Area (EEA) s not underwriting any British policies, there is no need for the country’s Prudential Regulation Authority to get involved.
The LMG argues such a move would “significantly boost the UK’s competitiveness and its attractiveness to EEA firms seeking to write global cover in the London market, while presenting no risk to UK policyholders”.
Other recommendations include the regulator relying more on supervision by non-EU regulators, such as where the rules are roughly equal to those in the UK, and treating reinsurance branches of big insurance groups more lightly.
Last month Anna Sweeney, executive director of the Prudential Regulation Authority (PRA), insisted it is “taking steps to rationalise the requirements that branches are subject to”.
But she added: “There can be no question of insurance branches being held to lower standards than insurers that are based here.”
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), recently claimed co-operation throughout the world would provide regulators with the power to “defer to each other’s regulation, and thereby avoid duplication”.
The LMG also wants regulation of insurance brokers that serve sophisticated corporate clients to be watered down.
The trade body is also calling for regulators to have an overarching statutory duty to promote international competitiveness.
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The Financial Services Act introduced this year brought in a requirement for regulators in Britain to “have regard” to the relative standing of the UK, but only in a handful of areas, but the LMG is asking Downing Street to do more to promote inward investment.
But the LMG has warned against major changes to capital requirements that could widen cracks in the relationship between the UK and EU.
It said: “It is crucial that any changes do not threaten the judgment of the UK’s regulatory framework as equivalent, which is important for ensuring a level playing field across the EU member states for UK reinsurers.”
The Treasury insisted it is currently looking at the replies to consultations and will publish its conclusions in due course.