A new business relationship with Britain in the wake of its vote to leave the EU is “critical”, an island business leader said yesterday.

Bradley Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers, said the island needed a twin pillar approach to Britain and the EU to ensure business did not suffer as a result of Brexit.

Mr Kading said that the EU was the second most important insurance market for ABIR members after North America.

He added: “Because Europe is such an important market to us, Bermuda has acted to win Solvency II equivalence, engage with critical International Association of Insurance Supervisors regulatory work streams, enact Organisation for Economic Cooperation and Development tax transparency, co-operation and enforcement rules and build relationships with key EU officials and key jurisdictional insurance supervisors.

“Now, with the reality of Brexit, we need to ensure Bermuda has a twin pillar approach with regard to our European markets, addressing not only the EU 27, but also the critical UK market.”

Mr Kading said that Bermuda would need new Britain-specific regulatory and trading agreements with EU equivalency with Britain to provide cross-border reinsurance market access and recognition of the Bermuda Monetary Authority as a group supervisor.

Quoted by Insurance Day, he added: “Bermuda will need to replicate this relationship with the UK by further strengthening regulatory relationships and interactions.

“Bermuda will seek to ensure the UK’s Prudential Regulatory Authority recognises the BMA as a group supervisor and Bermuda reinsurers can continue to engage in free market reinsurance trade with the UK.”

And he said: “The UK has a long tradition of free trade in reinsurance that precedes Solvency II.”

Mr Kading added that early leadership from Britain in Bermuda’s successful bid to compete on equal terms in the EU could help Britain’s PRA in its own negotiations to continue free trade in Europe.

He said: “Winning equivalence from the EU for the UK under Solvency II and other financial regulation markets will be critical.”

Mr Kading added that the IAIS forum would become even more important to the UK as it would no longer have the same clout in the EU corridors of power to influence global standards through the EU and the Occupational Pensions Authority.

He said that Bermuda would also need to continue its engagement with the IAIS since the adoption of the common framework for the supervision of internationally active insurance groups was on the horizon, while the International Capital Standards project would lead jurisdictions closer to a global standard for regulation.

Mr Kading added: “The UK is a powerful member of the OECD and G20, but post-Brexit the UK and the EU positions may diverge.

“The opportunity the UK has is to build more alliances outside the EU bloc to achieve its goals.

“The UK’s departure from the EU will be notable on tax policy — a pro-market competition voice will be lost in the EU.

“With the UK goal of moving to a 15 per cent corporate tax rate attracting attention, UK multinationals will be envied but may also face a negative attitudinal shift.”

Mr Kading said that ABIR members had nearly 10,000 employees in Europe, with 6,000 in Britain alone, while Bermuda’s commercial insurers accounted for nearly 25 per cent of the capital and capacity at Lloyd’s of London.

He added: “These statistics mean Bermuda and the UK will be travelling companions along the post-Brexit road.”