The impact of Brexit on the London insurance market will be minimal, according to Sir Richard Dearlove, OBE, Non-executive Chairman of Ascot Underwriting, describing Brexit as “a sideshow.”
Addressing delegates at the MMC Rising Professionals Global Forum, Mr. Dearlove said: “The London insurance industry is a global industry, not a European industry, so the effect of Brexit will probably be very small.”
He added that Lloyd’s decision to set up a European Union operation was “nice publicity but not essential.”
In a keynote speech identifying a variety of risks that threaten to reshape the global political landscape, the ex-head of MI6 said Brexit has elevated interest in political risk in the London market but that it is still often overlooked at an industry level.
“I was surprised when I came into insurance to discover pockets of expertise among those who specifically work in political risk or terrorism insurance, but a general disinterest in the bigger picture within the wider industry, other than where it affects big strategic issues,” he said.
Mr. Dearlove told young professionals attending the event the world is “living through a watershed moment in international affairs,” and that “political risk is relevant to everyone working in insurance.”
“You can’t write insurance without taking consequence of the larger context,” he said.
“We are living through massive technological upheaval, and nativist populism threatens the liberal order we have taken for granted. The world faces the challenge of having to create a new international order over the next decade,” he continued.
Mr. Dearlove said the West’s relationship with China would be central to ensuring a successful transition, but the former spy chief warned that allowing Chinese telecoms giant Huawei to help build the United Kingdom’s G5 network posed a national security threat.
“Huawei is not a private company in the sense that we would understand, it is beholden to the Chinese State. China is a very aggressive intelligence collector and it uses technical capability to collect continuously,” he said, adding that insurers face daily attempts from China to obtain their intellectual property.
Mr. Dearlove also suggested that the economic risks posed by growing political instability are being overlooked by many businesses, warning that “we are now heading for a eurozone crisis.”
“Despite the extraordinary meltdown we are currently seeing in the liberal order, financial markets are remarkably complacent. There seems to be very high tolerance for political risk and international business has proven more impervious than we all expected,” he said, before posing the question: “Why is the British Economy in such relatively good shape when political risk is so high?”