The ship insurer North P&I Club is setting up a new European Union subsidiary in Dublin due to the increasing possibility that it and other companies will lose access to the EU single market after Brexit.
British ship insurer North Protection and Indemnity (P&I) Club is preparing for post-Brexit fallout by setting up a new European Union (EU) subsidiary in Dublin, the firm said Monday.
North P&I Club, along with its subsidiary Sunderland Marine and the vast majority of U.K. and EU businesses, fear that Britain may lose access to the EU single market after Brexit. As a result, insurers are making contingency plans as a messy fall-out could mean losing “passporting rights” that allow U.K. financial service firms to trade in Europe without the need for locally regulated entities.
North P&I Club is the first insurance provider to announce its location for an EU subsidiary and it is expected to start implementing its contingency plans in the first quarter of 2018, according to a report from Reuters.
The firm said Monday that due to “regulatory uncertainty and a realistic prospect,” passporting rights could be lost as early as March 2019 upon the current two-year Article 50 expiration. Therefore, its board agreed that a subsidiary insurance company should be established in Ireland to underwrite all future business in the European Economic Area for North and its separate unit Sunderland Marine commencing Feb. 20, 2019, said Reuters.
“The decision to locate the subsidiary in Ireland follows an extensive horizon scanning exercise during which a number of possible locations were considered,” said North P&I Club. The firm cited the regulatory, legal and taxation framework, a mature regulatory system, a strong talent pool, easy travel connections and lack of language barriers as the motivation for their choice of Dublin. Over 40 percent of the company’s global business is located in Europe, said Reuters, and Dublin is favored by many specialized companies as an alternative base to London due to low corporate taxes.
Britain’s long maritime history has allowed it to dominate the global marine insurance market and losing access to specialist P&I clubs like North could weaken other parts of the shipping services sector.
“There are 13 major global P&I clubs, of which six are regulated in Britain and are estimated to account for over half the total market share of an industry that insures about 90 percent of the world’s ocean-going tonnage,” said Reuters. “Many of these clubs – owned by shipping companies – have been an integral part of the City of London for nearly two centuries, insuring ocean going ships against pollution and injury claims, typically the biggest costs when a vessel sinks.”
British ship insurer preparing for Brexit fallout
