Loss of financial passporting rights post-Brexit 'could hit Lloyd's of London'
Insurance market Lloyd's of London could suffer a blow to business if the UK loses financial passporting rights once it leaves the European Union, according to Fitch.
The credit ratings agency said London-based insurers wanting to underwrite risk across the European Economic Area (EEA) would have to set up new operations in the EEA if Britain can no longer access the passporting system.
It said the move could see business move away from Lloyd's, as the EEA counted for £ 2.9 billion or 11% of its gross written premium last year.
Banks and financial firms wanting to trade with a country in the EEA must apply for a passport. But once authorisation has been granted, businesses then have licence to sell their products to any other country within the EEA.
Companies benefit because they do not have to apply for authorisation in each separate country once their initial passport has been approved.
Without having access to a passport, UK-based financial firms would face a barrier when attempting to trade with countries within the European single market.
The European Central Bank (ECB) has warned that Britain would not be able to access the passporting system without remaining a member of the single market and abiding by its rules.
A key principle of the single market is the free movement of people, which the Vote Leave campaign targeted as an area it wants to opt out from in order to curb immigration.
A spokesman for Lloyd's said: "We have been clear since the vote that it is in the best interests of Lloyd's and the specialist insurance sector that we are able to maintain access to the EU's single market - preferably with passporting rights - and we will continue to make that case to Government.
"However, we are progressing the options available to us to ensure the Lloyd's market is able to continue trading with the EU and take advantage of the new opportunities that will arise.
"We believe that the quality and expert underwriting provided by the Lloyd's market that has been attractive to European customers over the decades will continue to be so in the post-Brexit environment."