European Union insurance business written from London would shift to the continent if Britain votes to leave the bloc in a June 23 referendum on EU membership, industry groups said on Friday.
Around 16 percent of London’s insurance business comes from EU countries other than Britain, or 9.6 billion pounds ($13.8 bln), the International Underwriting Association of London (IUA), Lloyd’s of London, and Fidelis Insurance said in a joint paper.
France, Germany, Spain and Italy have been the main markets in Europe for London’s insurance business.
Negotiating trading terms with the EU would take years if Britain were to leave, the paper said.
British insurers would almost certainly have to lodge large sums of money in EU states, report to local regulators and comply with regulations that are as tough as those in the bloc, it added.
“For the London market, it seems likely that, over time, EU insurance business now underwritten in London would migrate to a company within the EU.”
Separately on Friday, the head of U.S. bank JPMorgan Chase (JPM.N), Jamie Dimon, told British staff that a decision by Britain to leave the European Union could mean “fewer” jobs with the bank there and more jobs in Europe.
Backers of leaving the EU, or Brexit, say the move would cut the regulatory burden for British firms and, given the size of its economy, Britain could negotiate speedy and attractive trading terms with other countries.
The insurers’ joint paper said at least six of the IUA’s 46 members, which are predominantly non-British companies, would reconsider the legal status of their London operations if there is a Brexit. Only four of the IUA’s members have their international head office in the British capital.
Over time, capital coming into the London insurance market would head for another EU country, and access global markets from a rival hub such as Bermuda, Zurich or Singapore.
“This latter threat is more immediate than the emergence of a rival hub within the EU, although the rise of a new EU insurance hub is a potential longer-term danger,” the paper said.
The capital backing London’s insurance and other financial services sectors is predominantly foreign-controlled, has no specific interests in building British exports, and will always consider more attractive locations, it said.
Source: Reuters