Brussels: The city that is the beating heart of the EU in terms of the administrative, legislative and regulatory functions, is now the city of choice for Lloyds of London to set up their European subsidiary.
For many ‘Brexiteers’, this may leave a somewhat sour taste in the mouth given that the day after Theresa May officially gave notice of our intention to divorce from the EU, an iconic and historic UK-made institution has declared it will be moving part of its operations out of the UK and into the EU.
A European subsidiary, of course, was on the cards almost immediately after David Dimbleby confirmed late on referendum night that the UK had voted to leave the EU. For non-insurance professionals however, the announcement made by Lloyds regarding their subsidiary is one of the first tangible signs that (some) professional services would be leaving these shores in the next couple of years.
It is estimated that around 11% of insurance premiums are derived from risks underwritten within the EU. This represents a sizeable chunk of business under the current London operation which within two years, will be transferred to Brussels which will inevitably mean some loss or transfer of jobs to outside of London.
But where there is change, there has to be optimism. Emerging risks and developing economies outside the EU mean that many companies will still have a demand to reduce their risk portfolios by working with the oldest and most experienced insurance market in the world: Lloyds of London. With cyber being a particular area for growth and innovation, the market will also have to adapt to incorporate risks in relation to advances in other new technologies such as AI, the internet of things and quantum computing.
The next two years will be fraught with disagreements and exasperation between the two negotiating parties. My personal view is that a deal will be done which will probably be to the slight dissatisfaction of both parties – I doubt there will be an overall “winner.” But one hopes that the timely announcement by Lloyds demonstrates to the UK, the EU and the rest of the world that the insurance industry is ready to adapt to changes and ready to face new challenges head-on.