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- German financial regulator BaFin asks UK-based insurers to provide details of “emergency” Brexit plans, FT reported. Insurers are subject to the same passporting rules as banks so must set up new EU-entities. Lloyd’s of London and AIG among major insurers to announce new EU offices.
LONDON – Germany’s financial regulator, BaFin, is demanding that British insurers inform them of their “emergency” plans for the worst case scenario when it comes to Brexit, according to a report from the Financial Times on Monday.
BaFin has asked insurers based in the UK to provide them with details of “what emergency plans you have developed to take into account all conceivable exit scenarios,” the FT said, citing a letter sent to firms by the regulator. It has also reportedly asked that more emphasis is put on Hard Brexit scenarios.
Like banks, insurers are part of the so-called financial passport – a set of rules and regulations that allow UK based financial firms to access customers and carry out activities across Europe. That passport is tied up with membership of the European Single Market, which the UK plans to leave.
Numerous insurers, including the UK’s world famous insurance market, Lloyd’s of London have already announced plans for EU-based subsidiaries. The world’s oldest insurance market, founded in 1688, said it would open a subsidiary in Brussels earlier this year. AIG, one of the biggest insurers in the world, said in March that it plans to set up a new base in Luxembourg after Brexit.
“AIG sees opportunity in the ongoing resilience of the UK insurance market. At the same time, we are ensuring that our clients and partners experience no disruption from the UK’s EU exit,” it said in a statement at the time.
The letter is BaFin’s latest foray into the UK regulatory environment as Brexit approaches. Last week BaFin President Felix Hufeld spoke at an event in London, warning that “we all will pay a price” for Brexit.
“It is crystal clear in my mind that whatever the outcome of Brexit is going to be, it will cost a price, both for British consumers, as well as EU27 consumers. That is very clear,” he said.
Hufeld said there is a “vast economic dependency” between UK and EU that will be disrupted by the pair’s “historic divorce.”