After many years of political wrangling, the United Kingdom really is leaving the European Union. Is it a relief that finally there is clarity about Brexit?
The elections in December of last year resolved the political stalemate that we have witnessed throughout 2019. But while there is now clarity about the direction of travel, all the talks between the United Kingdom and the European Union have so far been about the exit and not about the future trade relationships. The only certainty we have at the moment is that we are leaving the EU. Luckily, that’s with an agreement. But we don’t know anything about the basis for working together with the EU in the future.
What will HDI Global SE in the United Kingdom have to do now in readiness for the change?
As far as we are concerned, what is clear is that Brexit will entail more work. Although there is a transition phase until the end of the year, we are registering as a Third Country Branch within the United Kingdom so that we can continue to write and deal with insurance business in the United Kingdom. We already submitted this application and initiated this process at the beginning of 2018. There will be additional requirements that we will have to meet within 36 months of Brexit, but we also have regulatory duties requiring compliance within six months of leaving the EU. Moreover, in future, we will be regulated both by the British and by the German supervisory authority.
What impacts will Brexit have on your business?
Within the EU, freedom to provide cross-border services is applicable. The United Kingdom will lose this advantage by leaving the Union and on expiry of the transition period at the end of the year. This has practical consequences. It used to be the case that a dedicated local policy was not necessary in the United Kingdom for companies that we were insuring as part of our International Programmes. After the transition phase comes to an end, this country will have the status of a Third Party Country for the EU. This means that we will have to issue more local policies. Naturally, this means an additional volume of policies. However, we have undertaken preparations for this eventuality and we have made the appropriate resources available. We have also developed solutions for meeting our contractual obligations after Brexit. We have done as much as we can and we will pay close attention to developments.
Does HDI Global as a German insurer have a disadvantage in doing business in the UK in comparison with UK based insurers?
The London market is comprised of companies from all over the world and that is what makes London special, so, no, I don’t believe we will be at any more of a disadvantage than we are now.
What is changing for the HDI colleagues who work in the United Kingdom?
The United Kingdom is a multicultural society and you can see that in our team. We have colleagues who originally come from other EU countries. Some of them now have permanent leave to remain, others have successfully applied for British citizenship. Luckily we are leaving with a signed deal so I don’t need to get a new passport rushed through!
Brexit: What are the next steps?
When the United Kingdom exits from the EU, there will be a transition phase until 31 December 2020. During the coming months, the United Kingdom will initially remain in the EU single market and in the customs union. By the end of the transition phase, a free-trade agreement needs to have come into being that will regulate the future relationship between the EU and the United Kingdom. If this is not achieved, the rules of the World Trade Organisation will automatically apply.