Brexit will boost the expansion of specialist MGAs in Europe: Grima from New Dawn Risk
Uncertainties over the UK’s vote to leave the European Union (EU) have seen many intermediaries establishing offices in the EU and, according to Elizabeth Grima, senior executive director of New Dawn Risk (Europe ), 2022 will see an expansion of specialized European MGAs to the detriment of the London market.
As part of New Dawn Risk’s 2022 forecast series, Grima recently discussed the long-term impact of the UK Brexit vote on the European insurance market.
She explains that while initial predictions said little would change as a result of the UK’s withdrawal, the point is that it hasn’t entirely been.
As our readers know, a good number of London-based carriers have had to reconsider their European business models after Brexit, and that includes the desirability of continuing to underwrite business in certain countries.
As such, Grima notes that jurisdiction and country of domicile are increasingly recognized as an issue for service providers globally.
“As a result, a number of intermediaries, whether managing general agents (MGAs) or intermediary establishments, have moved to the EU to preserve or develop their business in Europe. The choice of legal jurisdiction for these offices has varied in reason but is generally tied to a calculation based on proximity, relationships, regulatory constraints, tax incentives and speed to market, ”said Grima.
Adding that although this is a natural development, there is a current which is ultimately negative for London’s reputation as an insurance hub.
“Much has been said about the growth of the MGA model over the past two years, and it is generally accepted that this is an area of the market where creativity and new ideas flourish, innovation in price. and customer service being particularly successful, ”says Grima. “It’s a lot to the detriment of the London market if we start to see MGAs establishing themselves in Europe at the expense of London.”
London’s insurance market is the oldest in the world and Grima says it will always be a global hub for insurance business.
However, recent regulatory changes have created a slow but inevitable distance from the traditional market with greater opportunities for innovation occurring in the MGA space and delegated authority.
“Watch out for this trend which is bringing increased critical mass to European markets, much to London’s disappointment in 2022 and beyond,” she said.