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The Actuary The magazine of the Institute & Faculty of Actuaries

Eight priority markets identified for UK insurance industry

China and India have been identified as the top two priority markets for the UK insurance industry after leaving the EU, according to a new paper by the Association of British Insurers (ABI).

Trade opportunities following Brexit ©Shutterstock
Trade opportunities following Brexit ©Shutterstock

It states that potential for new trade deals will open up opportunities for the industry, which is currently the fourth largest in the world, to expand in to markets around the globe.

In addition to China and India, Hong Kong (SAR), Indonesia, Japan, Malaysia, Singapore and South Korea have been identified as the eight markets with the highest potential for progress and growth.

ABI director general, Huw Evans, said: “The UK insurance and long-term savings industry wants to be a front runner in the race to make the most out of the new trade opportunities that are set to emerge following Brexit.

“To support this we are setting out the industry’s priority markets and what we think needs to be done to open them up further.

“Many insurers are already operating in the markets identified, but the potential for further growth is palpable and exciting."

The markets highlighted, were chosen based on size, growth potential, and the presence of existing commercial and regulatory relationships.

The industry paper, submitted to the government by the ABI, suggests that a gradual approach will need to be adopted, to secure improvements in the ease of doing business there.

“With protectionist forces growing in strength across the world, the insurance industry can become a leading example of how free trade can benefit everyone.

“The UK is seen as a world leader, and can help many emerging and developed countries, which exhibit significant under-insurance.

“Trade deals offer the opportunity of a partnership between the expertise and best practice of British providers and the growing insurance needs of these countries.”

Key protectionist or discriminatory practices need to be addressed if UK insurers are to grow their presence in these markets, according to the paper, which include:

    Getting in place workable rules on investment, such as whether foreign insurers can set up subsidiaries or branches overseas

    Easing restrictions on Foreign Direct Investment, or limits on equity stakes in domestic insurers

•    Tackling discriminatory measures, such as reinsurance collateral requirements

    Ensuring UK holding companies of international companies can carry out financial functions such as lending money to overseas subsidiaries, subscribing for shares in overseas subsidiaries, and receiving repayments, distributions and other returns of value back to the UK from overseas

•    Addressing barriers to moving skilled people into overseas markets.

“Securing sizable and sustainable improvements in the ease of doing business in China and India will take time and commitment, but it will be worth it,” Evans added.