The starting gun was finally fired this week on Britain’s exit from the European Union when Prime Minister Theresa May triggered Article 50 on Wednesday. Lloyd’s was quick off the mark, announcing today that it will be opening an office in Brussels, allowing the market to continue writing business to all 27 EU members from January 1, 2019, after Britain leaves.
In fact, Lloyd’s had been making contingency plans since at least last June when the Brexit vote was announced to ensure it retained passporting rights across the EU, and it is comforting to know the market is well-led and well-prepared. At first glance, the Brussels subsidiary seems to have solved the problem of Lloyd’s not being able to write business in the European Union without having an office within the EU.
There has been much speculation about the effect Brexit will have on the London insurance market and the City in general, particularly over jobs. Lloyd’s employs about 700 people in London and has a global workforce of about 1,000. It has been reported that the Brussels office will have about 60 staff initially, including some already working in Germany and Italy, with about 20 on the ground at the start. Lloyd’s CEO Inga Beale is quoted as saying the “odd job” might move to Brussels, including staff who already have European roles.
So while Brexit will definitely result in some job losses in the City, it will not be an exodus and certainly not an existential threat to the London insurance market. As Forbes pointed out, Lloyd’s is a market - it is not the insurance companies themselves – so the new Brussels office will allow all Lloyd’s insurers access to the entire EU market. In other words, there may be around 100 jobs out of 700 moving, not 100 jobs out of 30,000 – which Forbes notes is “something that’s not even a pimple to mark the face of Brexit”.
Without being complacent, it’s worth reminding ourselves just what a unique repository of specialist insurance knowledge the London market really is. The great concentration of intellectual capital in EC3 is the envy of the insurance world, and it is something that will always be a magnet for companies across the world which need to place complex risks that cannot be commoditised or bought over the internet.
The London insurance market, although sometimes characterised as insular is, in reality, the opposite, a place where the world meets to buy the specialist insurance that oils the wheels of the world’s economies.
The UK may be saying goodbye to Europe, and those of us who treasure our European ties and the cosmopolitan living and business benefits it has given us may be a little sad this week. However, the babel of voices we find in and around EC3 every day as the world comes to do business will ensure the London insurance remains at the very heart of the global economy.