Reliance on passporting rights ‘exaggerated’ says think tank

The benefits of access to the single market across the whole financial sector has been overstated, according to a report from think tank Open Europe.

It said that retaining retaining passporting rights is not an issue for insurers and that the UK should focus on the banking sector when negotiating new financial trading terms with the EU.

Open Europe senior policy analysist Vincenzo Scarpetta told Reuters: “To claim that the success of the UK as a global financial centre is entirely reliant on the passport is exaggerated.”

Open Europe also said that there is no real single market for insurers as up to 87% of companies who operate across borders already do so via subsidiaries.

However its report found that access to the single market would be important for the Lloyd’s market as continental business only makes up 11% of its gross written premium.

Open Europe said: “A bespoke agreement will be important for Lloyd’s of London.”

The think tank stated that Britain should seek passporting rights for banking, make sure that EU-domiciled funds can be managed from the UK and ensure that insurers can do business with the continent.

The report said: ”If the current passporting system is lost, there are three broad alternatives: ‘equivalence’, bespoke agreements and local arrangements.”

Now watch KPMG’s Paul Merrey and Siân Hill’s views on what insurers should be doing after Brexit: