EU and Union flags fly above Parliament Square in central London, Britain. Picture: REUTERSAs much as £61bn of business is shifting to rival financial centres in the EU as a consequence of Britain’s vote to leave the bloc. And it is happening regardless of the divorce terms.
Lloyd’s of London, the world’s biggest insurance market, stands out as a laggard: About £3bn is in policies written there over the 25 years before it opened a Brussels subsidiary at the beginning of 2019. If Britain leaves the EU without a comprehensive agreement, Lloyd’s wouldn’t be able to guarantee that it could legally pay claims on those European policies. The institution says they will all be transferred to the continent by October 31 2020.
The longer-term effect of the shift will be both practical and symbolic, and it matters because London still accounts for as much as one-tenth of the world’s insurance and reinsurance market. Brexit has been chipping away at that role, and the decline could steepen. Insurance companies that have yet to move their European business from the UK need explicit permission from authorities in each of the 27 other EU countries to service clients there. Absent those approvals, the insurers can’t legally pay claims or provide other services.