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The LMG said under its proposals, based on a free trade agreement, the EU and UK will maintain control of their own regulatory systems. Developed by the LMG Brexit Taskforce, the agreement would provide mutual market access alongside recognition of the EU’s and UK’s prudential regulatory regimes, including Solvency II equivalence and a framework for supervisory cooperation.
“The agreement proposes a ‘prudential carve-out’ and is not a new concept to the EU,” the LMG said. It added that an agreed transition period would ensure continuity for clients until the free trade agreement is implemented.
The LMG said the idea was founded on the bilateral agreement between the EU and US agreed at the beginning of November. Under the agreement, EU and US reinsurers can conduct business in the other jurisdiction while their regulatory systems are aligned under a mutual regulatory cooperation agreement.
Malcolm Newman, managing director of SCOR’s EMEA hub, chairman of the International Underwriting Association and sponsor of the LMG’s taskforce, said: “Our proposal offers clear mutual benefits to clients on both sides of the Channel, and creates a workable solution that would mean that neither the EU nor the UK would have to sacrifice market access or control over their respective regulatory regimes, solving the access versus control dilemma.
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