While insurers and reinsurers will be able to deal with the aftermath of an exit of the U.K. from the European Union, the time and cost involved are unwelcome intrusions to the business, executives suggested here.

Plan B might be to redomicile to another country or even to live without premiums generated from the U.K., Chris O’Kane, chief executive officer of Aspen Insurance Holdings Ltd., said during a session of the Standard & Poor’s 2016 Insurance Conference last week, noting that his company has certainly thought about the implications of the Brexit vote scheduled for June 23.

“The EU insurance market for Aspen is about 7 percent of our total premiums. It’s valuable. It’s important. And we want to keep it. But you can live without 7 percent if you have to,” O’Kane said. “I don’t think we will,” he added.

O’Kane explained the situation for U.K. insurers more generally, noting that via the EU, Lloyd’s of London trades with 53 countries around the world. “It does so by treaties that have been negotiated through the EU. So now we don’t have that ability. So we’ve got to recreate it.

“I’m sure it can be done given enough time,” he said. “But who wants to spend the next three years [or] five years renegotiating 53 treaties when we already have one perfectly good treaty that works very well?”

The task will mean that insurers and reinsurers need to divert their attention away from the important work of navigating through the market, O’Kane said, referring to the main topic of the conference and the panel discussion in which he was participating, titled “Reinsurers Walking a Tightrope.”

Throwing a Brexit vote into the mix, he lamented: “So instead of thinking how to survive a soft market, how to prepare for a hard market, how to be innovative in business, how to [deal with] technologic change, we’re dealing with this kind of low-value regulatory burden that comes with it. That’s an adverse consequence.”

Still, there are different ways for companies like Aspen, which participates in both the insurance and reinsurance markets, to access business. “Many of us have EU-licensed companies. If the U.K. is no longer in that position, we’ve got to say to ourselves either we’ve got to wait for the U.K. to sort something out, or we take the steps on our own.

From the point of view of Aspen, we can’t rely on the U.K. to sort this issue out fast enough, so we’ve got to [decide], do we want to either redomicile to some other country—not the U.K.—[Or] do we want to see if our Bermuda subsidiary could license something within the EU?”

Folly and Uncertainty

O’Kane said, “We’ve given that a lot of thought, and more thought recently because we always thought that the [Brexit] referendum was a bad idea, but the result was going to be clear. Now the result is not clear. It’s still a bad idea, but the result is hanging in the balance,” he said, noting that while earlier reports said that there’s a big majority that want to remain in the EU, the polls are now saying that the exit camp has a small lead.

“I think it would be the most monumental act of folly that a nation has ever committed,” said O’Kane, responding to an unasked broader question.

“It really is as if the lunatics have escaped from the asylum,” he said, referring to standards of public discourse which have deteriorated in his view.

“Objectively, the U.K. should stay where it is, with power, with influence and with benefits.

“There’s this kind of xenophobic atavistic view that somehow there was some glorious past and that is compromised by mixing with openness of foreign borders. It’s not well argued. But it’s appealing to a certain section of the electorate,” he said.

Speaking with a more detached perspective, Odyssey Re’s Young said “it would be extremely unfortunate if the U.K. left the EU.

“Probably the biggest negative is just the uncertainty. If people vote in favor of leaving, how long is it going to take to exit?” Young asked, suggesting that the transition period is particularly problematic.

“Financial markets don’t like uncertainty. It’s going to have a negative impact on the pound. Who’s going to want to invest? If you want access to the EU and you were thinking about setting up a business in the U.K., would you do it now if you don’t have passporting into Europe? You wouldn’t do that.”

“The fact that the people in our industry can’t move easily back and forth, that’s an issue for the business,” he said.

He added: “London is, however, a very powerful market. It’s rich in talent and capital and knowledge. It will maintain an important position in the global marketplace regardless.”

O’Kane welcomed Young’s vote of confidence. On the other hand, O’Kane said, there are those who think very differently, referring to a comment from the deputy mayor of Paris at some point who had said he would commission “a big red carpet to welcome all the various bankers and traders who won’t be able to work from London.”

“It’s a threat, more I would say for the City of London financial services than necessarily for insurers and reinsurers,” O’Kane agreed.

Iordanou joined the other executives in saying Brexit “would be a mistake and it would be negative.”

“In financial services, it’s a global marketplace, and the less barriers you have, the better the system works,” Arch Capital’s leader said.

“It’s not just Lloyd’s but the banking sector and investment sector….Imagine having to renegotiate with all the European nations—losing that passport that we operate with today throughout Europe with one set of licenses.

“It would be a burden on us. We have to do it. It will cost some time and money, but I think it creates more of the turmoil, [and] business moves when there is turmoil.

“I don’t have the proper license. I can’t issue that policy. I’m waiting.

“And I don’t know what the reaction is going to be of the French and the Germans and the rest of the EU, when the Brits say we don’t want to be part of your club anymore. Those negotiations on bilateral treaties aren’t going to be easy to do,” Iordanou suggested.