Great Brexit Insurance Migration Shifts $75 Billion From London
London’s outsized role in the global insurance industry is being whittled down by Brexit.
As much as 61 billion pounds ($75 billion) of business is shifting to rival financial centers in the European Union as a consequence of Britain’s vote to leave the bloc.
And it’s happening regardless of the divorce terms. The EU’s insurance and pensions regulator has ordered every U.K.-based underwriter to transfer policies held by European clients to units on the continent. While the bulk of those total liabilities — the potential payout of all the policies, an industry gauge of scale — has moved or is moving to Belgium, Luxembourg, Ireland and elsewhere, about 5 billion pounds will still be in Britain if Brexit happens Oct. 31, according to the Bank of England’s Financial Stability Report in July.
Lloyd’s of London, the world’s biggest insurance market, stands out as a laggard: About 3 billion pounds 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 Oct. 31, 2020
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