The Lloyd’s Market Association (LMA) has backed a cross-party UK member of parliament report that calls on its government to deliver an “urgent” Brexit transition deal with the European Union.
Responding to the conclusions of a Treasury Committee report, the LMA said the insurance and reinsurance markets would lose business during 2018 without certainty about transitional arrangements post-March 2019.
David Gittings, CEO of the LMA, said: “The (re)insurance market will begin losing substantial business in 2018 as clients look to place or renew policies that straddle the Brexit date.”
The report from the Treasury Committee says transitional arrangements must be simple enough to be agreed from both sides “within a matter of weeks”. This is needed to provide certainty about the legal trading framework from 30 March 2019 and allow as much time as possible for discussions on the long-term trading environment.
The Treasury Committee report notes that the UK government will find it “very challenging” to complete the free trade agreement on its terms. “More importantly, businesses do not have confidence that the future relationship will be known and agreed by March 2019. The government should seek, by the end of the Article 50 process, an agreed framework for the future trade agreement and a clear direction of travel,” the Treasury Committee said.
Given the challenges of agreeing a trade deal before the Article 50 deadline, it foresees two options for the UK’s future economic relationship with the EU on 30 March 2019: either a no-deal and reversion to WTO rules, or a temporary preservation of the status quo.
“In terms of their economic impact on both the UK and the EU27, the difference between these two outcomes is dramatic,” the report says.
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