UK maritime insurer London P&I Club is taking out an insurance policy against the business risks of Brexit by opening a subsidiary in Cyprus. The European market accounts for nearly two-thirds of London P&I’s business, and a Cypriot entity would still be able to operate under EU rules with EU clients in the event that a “hard Brexit” impedes cross-channel transactions.
London P&I, which has been serving the UK’s maritime sector since the dawn of the steamship era, told Reuters that it is now obtaining the necessary licenses from Cypriot authorities and setting up its new operations in the island state. they are one of the first to openly declare their post Brexit strategy.
Britain’s financial services sector relies heavily on a European client base, and it has lobbied heavily for a Brexit deal that ensures continued market access. However, successive British proposals for an open-market agreement for finance have met with disapproval from Brussels.
On Friday, lead EU negotiator Michel Barnier rejected UK Prime Minister Theresa May’s latest plan for post-Brexit financial ties. Her government had proposed a system of “enhanced equivalence” involving mutual recognition of financial regulations between the EU27 and the UK, similar to “equivalence” arrangements that the EU has with the U.S. and Japan. Under May’s proposal, though, the EU would have had to give Britain a longer period of prior notification before any cancellation of the agreement. Barnier told media that this was not acceptable since it would effectively allow the UK to set the terms of an EU policy. “Equivalence” has historically been a trade benefit that Brussels conveys upon its close partners, and the existing arrangements have a one-month cancellation period.