The UK insurance market: the London Market
The London Market is the international insurance market based in London. This is a major market for both insurance and reinsurance. Key players in the market are UK insurance companies, Lloyd’s syndicates and foreign insurers. A number of non-resident companies operate only at this level, doing no direct business and often using the same managing agents as Lloyd’s syndicates. Some of the bigger non-resident companies in the London reinsurance market are major reinsurers on a worldwide scale. Most of the UK companies in this market also write direct business, but there are also some pure reinsurers.
In the past many of the bigger non-life insurers carried on business through branches (permanent establishments) overseas, particularly in Commonwealth or ex-colonial territories. In the late 1960s and early 1970s much of this business was transferred to local subsidiaries, and much overseas business now takes this form. Since the completion of the single internal market UK companies authorised by the FSA to carry on insurance business in the UK are no longer required to seek separate authorisation from the equivalent regulator in any EEA state in which they wish to carry on business through a branch. The EEA comprises the EU States together with Iceland, Norway and Liechtenstein. Gibraltar is in a special position. It is a Member State by virtue of its link with the UK, but it is deemed to be a Member State other than the UK. More detail at GIM10030.
The position in relation to Switzerland is complex. There is an agreement between the EEC (as it then was) and Switzerland made on 10 October 1989, approved by the Council on 20 June 1991. It is designed to consolidate practices between Switzerland and the EU and remove obstacles to general insurance business between the parties, while reserving sovereignty. In 2006 the Swiss reformed their regulatory laws with a view to closer harmony, but the concepts of single licence and home country control still do not apply to Switzerland. An insurer properly licensed in its Home EU State will still need a Swiss licence to conduct business to or from a Swiss territory. This is subject to limited exemptions such as writing pure reinsurance business, which is not supervised in Switzerland. Switzerland does not recognise services business (GIM10070); there must be a branch operating there. And any insurers domiciled in Switzerland must obtain EEA Host State regulatory approval.