Insurance Ireland recently hosted 650 global CEOs, regulators and policymakers in Dublin at the Insurance Europe conference. Brexit was understandably high on everyone’s agenda and extensive consideration was given to the potential impacts, and opportunities, of a vote to leave.

Despite the level of preparedness, the result still came as a shock. The modern European insurance industry is built on the free movement of capital allowing access to each other’s markets underpinned by our new regulatory framework, Solvency II. All of this is now in question.
Ireland has been a particular beneficiary of this framework with 28,000 people now employed directly and indirectly in insurance here. The industry also holds €200 billion in assets and generates €32 billion in premium income per annum. Insurance Ireland is, therefore, firmly of the view that our Government needs to support the UK’s negotiated exit to protect the wider economy and the sector here. Any deterioration in our domestic economy impedes domestic Insurance sector growth and so the sector will provide any support we can to the Government’s efforts.

We do, however, maintain a competitive stance with our nearest neighbour and have to consider how best to protect and grow the insurance sector here, accepting that on leaving the EU, the UK will need to drive for increased competitiveness, which will in time present a challenge to our sector. One practical response is providing a regulatory ‘grandfathering’ of approved Insurance entities in the UK who wish to obtain prudential regulatory authorisation in Ireland.

The UK is an equivalent regulatory regime, however, as it stands, a company moving here would need to go through a lengthy Central Bank of Ireland approval process. A fast-track approval process, that gives credits for a prior approval in the UK, would benefit current operators in Ireland and potentially attract new entrants.

Apart from the jobs and investment this could bring, there are significant systemic benefits for Irish customers and European regulation, among others, including:

1. It will maintain Internal capacity in the Irish General Insurance Market - especially with a high proportion of the capacity here serviced by branches of UK regulated companies.

2. It would bring a degree of certainty to UK-based insurers serving both Ireland and other markets by being able to access an equivalent prudential regulatory regime in Dublin in a timely manner, while keeping the majority of their operational infrastructure in London.

3. This would bring a wider degree of stability to the European insurance markets serviced from London.

4. Following the recent implementation of Solvency II, keeping UK insurers within this regulatory framework, and the insurance regulators under EIOPA, would enhance the stability of the European Insurance sector.

There is a compelling logic to this proposal but as with all policy proposals it is important to consider the wider impacts. One of the key considerations is our Regulator’s capacity to supervise a significantly expanded sector without additional resourcing. This is true not just for insurance but for Financial Services in general.

In addition, there are practical limits on capacity in Dublin with housing and office space being notable constraints. We know that the economic recovery has left infrastructural deficits and any policy to assist UK-based or other operations to Dublin has to be aligned with broader policies to address bottlenecks in the economy.