Lloyd's of London Draws Up Contingency Plans Before Brexit Vote

Lloyd’s of London is drawing up contingency plans in the event that Britain votes to leave the European Union and says an exit would be damaging to the insurance market.

“A vote to leave will create very real risks and uncertainties that we must be prepared for,” Sean McGovern, chief risk officer at Lloyd’s, said in a speech in London Wednesday. EU membership is “key to our future growth and development as we deal with competition from other insurance centers. This is why we have been so focused on our contingency planning work.”

The London insurance market contributes more than 20 percent of the City’s economy, McGovern said.

Prime Minister David Cameron, who faces euro-skeptic sentiment in his party and across the country, has pledged to hold a vote on Britain’s membership of the 28-nation bloc. That may take place as early as June 21. EU leaders are due to meet in Brussels next week to discuss the U.K.’s pitch for renegotiating Britain’s relationship with the group.

McGovern, who is leading the Brexit contingency plans, said EU membership gave London insurers and brokers access to the world’s largest insurance market and helped generate at least 6 billion pounds ($8.7 billion) of premium income. He also said it encourages foreign direct investment and facilitates trade outside of the EU deemed “critical to the success” of the London insurance market and it’s competitive position.

Exiting the EU would create a level of uncertainty “we have rarely experienced,” McGovern said. Our "objective is to ensure that Lloyd’s can continue to provide our market with access to the EU,” he said.