The impact of Brexit on Insurance
- Outbound UK insurers writing business in the EEA: There are approximately 300 UK insurers that write EEA business either through an EEA branch or under Freedom of Services (FOS). The first movers have been UK-based general insurers that are most focused on restructuring in order to continue to be able to access the Single Market post-Brexit. In most cases, this involves the establishment of an EEA insurance subsidiary, as an EEA branch license only allows access within that one country.
- Inbound European insurers: There are approximately 750 insurers across the EEA with some exposure to the UK market through either an existing UK branch or under FOS. EEA-based insurers will have similar considerations regarding how they can access the UK after Brexit. Although this group has been slower to start reacting, they are now more active, particularly those with a UK branch presence. Most of them are seeking UK branch licenses.
Although Dublin was expected to be a frontrunner soon after the Referendum result, and has attracted some new companies, it is the Benelux countries that are proving the most popular for insurers so far.
The selection process has typically been based on a number of criteria, including regulatory approach, taxation, access to a skilled workforce, and logistics. The reason why Luxembourg is viewed favorably includes the regulatory approach and its location in the center of Europe.
Life insurers have long dominated Luxembourg’s insurance market, but post-Brexit movers have mainly been specialty insurers, such as shipping and property insurers. More info can be found on our dedicated Brexit website.
KPMG met with Chris Johnson, CEO of FM Insurance Europe, and Takashi Kurumisawa, CEO of Sompo International Insurance Europe, to find out how they dealt with Brexit and why their companies chose Luxembourg for their insurance subsidiary.