By Elizabeth Grima, Senior Executive Manager of New Dawn Risk Europe
The dust from Brexit is at last beginning to settle, and it is now possible to see how this will impact the European insurance market in the long term. At first, following the leave vote, predictions were boldly made that little would change as a result of the UK’s withdrawal from the EU. But in fact this has not entirely been the case, as many London-based insurers have had to significantly reconsider their European business models at the point of Brexit, including whether to continue doing business in some countries at all.
Therefore, jurisdiction and country of domicile has become more and more of a recognised issue for service providers around the world. As a result, a number of intermediaries, whether managing general agents (MGAs) or intermediary facilities, have set up office in the EU to preserve or to grow their business in Europe. The choice of legal jurisdiction for these offices has varied in reason but generally is linked to a calculation based on proximity, relationship, regulatory constraints, fiscal and speed-to-market incentives.
Though this is a natural development, there is an undertow here that is not positive for London’s reputation as a hub. Much has been made of the growth of the MGA model over the last couple of years, and it is generally agreed that this is an area of the market where creativity and new ideas flourish with the innovation of pricing and customer service being particularly successful. It is much to the detriment of the London Market if we begin to see MGAs being established in Europe at the expense of London.
Though the London Market will always be a hub for insurance business, the recent regulatory changes have created a slow but inevitable shift away from the traditional market with more opportunities for innovation taking place in the MGA and delegated authority space. Watch out for this trend bringing increased critical mass to European markets, to the disappointment of London in 2022 and beyond.
