Brexit – We are prepared for any eventuality
The UK’s exit from the EU is the most hotly discussed topic in Europe at the moment. It affects everyone, including citizens, industry and the insurance sector. Bernhard Kaufmann, Chief Risk Officer, and Michael Menhart, Chief Economist, explain the measures taken by Munich Re to prepare for the future.
On 29 March, Brexit is scheduled to become reality. Despite this fact, we are none the wiser about what it will actually entail. Is the chaos causing you headaches?
Prime Minister Theresa May has postponed the vote in parliament and survived a vote of confidence within her own party. What happens now?
What would be the impact of a no-deal Brexit on the UK economy?
Kaufmann: During its preparations for the various possible outcomes, the British government has taken steps to ensure that there would be no chaos in the event of a no-deal Brexit. At the beginning of November, the UK parliament adopted the temporary permissions regime – which is important for us. Under a temporary arrangement scheduled to last until 2022, we will be able to continue with our insurance activities in the UK even if there is no deal with the EU. But one thing is certain: business processes will become more complex, as multinational business is also placed on the London market, and we will now have to separate off EU risks and write them in the EU.
What would an orderly departure involve – both economically and politically?
Kaufmann: When we started to prepare for Brexit, it was brought home to us just how convenient and advantageous the European single market is for our business. Following the UK’s vote to leave the EU in June 2016, we suddenly faced the problem of needing different and additional licences. In future, our activities will be spread over two separate legal regimes. We not only had to apply for licences in the UK, but also for our business in Ireland that we have been writing out of branches of our UK subsidiaries.
Do you think another referendum is a possibility?
Munich Re does a lot of business in the UK. What are the implications of all of this for our Group?
When are these arrangements due to take effect?
What specific impact will all of this have on our business – and on our clients and brokers?
Menhart: There is one other thing that I think is important. The EU has spent a lot of time and energy dealing with Brexit over a number of months – if not years. As a result, other topics important for the future have received too little attention. In the long run, this will have a negative impact on Europe’s competitiveness. It would have been much better for the UK and the EU to continue to work together on a digital strategy for the future, in order to be able to compete with China and the USA. In my opinion, that is where our most important challenges will lie in the long term.