John Nelson, Chairman of Lloyd’s of London, has warned that the institution may move some of its operations away from London if more clarity is not given surrounding the UK’s future relationship with the European Union.
At Lloyd’s of London’s annual dinner on Monday night, the Financial Times reported that Nelson stressed the importance of the UK retaining the passporting rights that allow access to the single market.
“At Lloyd’s we are very much of the view that retaining access to the EU single market is fundamental, not just for Lloyd’s but for the City in general”, Nelson said.
“If we are not able to access the single market, either through passporting rights or other means, the inevitable consequences for Lloyd’s, and indeed other insurance organisations, will be that we will transact the business onshore in the EU, and that obviously will have an impact on London.”
The concern for Lloyd’s surrounding the loss of access to the single market is it would have to renegotiate numerous deals for it to continue to write European business
However, he also stressed that Lloyd’s would continue to be based in London. The commercial insurance market employs 50,000 people in London and contributes over a fifth of the city’s total GDP. Approximately 11 percent of Lloyd’s premiums come from the EU.
Lloyd’s acts a marketplace for companies looking to buy commercial insurance, with its network of international licences allowing it to transact business worldwide. The concern for Lloyd’s surrounding the loss of access to the single market is it would have to renegotiate numerous deals for it to continue to write European business. In the lead-up to the EU referendum vote, Lloyd’s, and well as many other insurers, warned an exit would cause disruption to the particularly risk-sensitive industry.
In an interview on Monday with BBC Radio 4’s Today programme, Nelson said the longer uncertainties remain, the greater the chances of some Lloyd’s operations moving.
“If there is uncertainty for a prolonged period of time, then the industry will vote with its feet. That would mean moving business, or leaving London more quickly than the renegotiation timetable.”
Many of the insurers that operate using Lloyd’s have already drawn up plans to retain access to the single market, should passporting rights be lost, such as creating subsidies in places such as Dublin.
Nelson is due to step down as Chairman next year.