Lloyd’s CEO Warns Insurance Policies’ Continuity at Risk Under Brexit

Lloyd’s of London Chief Executive Officer Inga Beale said insurance contracts across Europe will remain at risk unless there’s an agreement on how they should be treated in post-Brexit Europe.

“Regulators across Europe can actually come to an agreement themselves and find a possibility to allow all the insurers and banks on both sides to continue to service those old contracts,” Beale said in a Bloomberg TV interview on Wednesday. “That’s what we’re really pushing for, that contract continuity.”

Lloyd’s is setting up a European headquarters in Brussels so it can sell products from a location domiciled in the European Union. While the operation should be up and running by Jan. 1, only about 40 employees will work there. “A lot of the activity that takes place in London will continue to take place in London,” she said.

Lloyd’s of London posted its first loss in six years after one of the costliest periods for natural disasters in a decade.

The world’s oldest insurance market recorded a pretax loss of 2 billion pounds ($2.8 billion) in 2017 as major claims more than doubled to 4.5 billion pounds. Devastating hurricanes, including Irma which caused widespread damage in parts of the U.S. and Caribbean, helped trigger an underwriting loss of 3.4 billion pounds. That pushed the combined ratio to 114 percent, reflecting larger payouts for claims than the revenue generated from premiums.

While its impossible to predict natural disaster losses going forward, Beale expects changes from global warming to affect the frequency and seriousness of natural catastrophes in the future, she said in the interview.

Despite losses caused by the unusual number of disaster claims last year, other European insurers and reinsurers such as Zurich Insurance Group AG and Munich Re were able to at least maintain dividends and continue share buyback programs. Costly catastrophes included wildfires in California and earthquakes in Mexico.