The Irish unit of UK insurance group Royal London is “monitoring” for any divergence between EU and UK industry regulations as a result of Brexit that may impact its business model here.
The firm said is watching for any change in how the two blocs manage the insurance industry as so-called regulatory divergence “could result in the loss of some element of efficiency” in its operating model, according to accounts for Royal London Insurance DAC for 2021 filed with the Companies Registration Office in Dublin.
Royal London set up the subsidiary in Ireland in 2018 to keep serving the market here after the UK voted to leave the European Union. Possible regulatory divergence between the two regions since the Brexit vote has long been a concern for businesses, with numerous firms setting up entities in Ireland to retain access to EU markets.
“Several services are outsourced to our parent company to benefit from the economies of scale of the Royal London Group,” the company directors said in the accounts. “Should such divergence occur, requiring changes to the operating model, this could result in logistical challenges and increase run costs,” they added.
As a result, the Royal London has “strengthened its control framework” that now involves “systematic monitoring” for any divergence in rules, they added.
A Royal London spokesman declined to comment on the accounts.
The Brexit trade deal implemented last year appeared to ease immediate concerns about the impact of possible changes in regulations. Still, UK Foreign Secretary Liz Truss — who is favourite to become the next Conservative Party leader and take over as Prime Minister next month — has pledged to to undo parts of the deal already in place. The EU has already started legal action against the UK over the proposed changes, and the dispute threatens to undermine the wider trade agreement.
The potential Brexit issues came as the Irish business saw profits increase 40 per cent in 2021 compared to a year earlier to €8.3 million. That boosted accumulated profits to €131.5 million. Gross premiums written rose 11 per cent to €98.9 million.
Overall staff costs totalled €1.2 million for the year. The business directly employed five people during 2021.