How Will Brexit Affect US Insurance Industry?
The result of the recent referendum, in which Great Britain voted to leave the European Union could have some impact on the P&C insurance industry, although the effects may not be evident for several years.
The European Union (EU) was founded in 1957 and established first as the European Economic Community. Today, the EU is a political and economic union comprised of 27 primarily European member states formed to promote economic and social progress after World War II.
Businesses, such as insurance company Aon, who moved their corporate headquarters from Chicago to London in 2012, may suffer if London loses its title as an international insurance hub. A business’ inability to use EU passport services will cause a dramatic increase in spending for many. In addition, some experts caution that carriers may not be able to offer the same coverage options due to additional trade barriers as a result of the UK’s exit from the EU.
However, other experts suggest that Brexit could present the US with an opportunity to become a dominant global player in the industry, as ties are cut to restrictive EU business regulations. Experts agree that, although there was some value in being able to have access to the common market, the resulting restrictions also created additional issues for US insurers operating throughout Europe.
Many carriers have begun the process to form new entities based in an EU member state and will change their legal domicile to those countries.
As exit negotiations continue, it remains to be seen as to what extent Brexit will have on the US insurance industry and on the global access to coverage.