UK insurers have warned of the consequences if Britain leaves the European Union (EU), with a referendum on the issue expected next year.

Association of British Insurers (ABI) Director-General Huw Evans told the JP Morgan European Insurance Conference in London that the matter is a major risk for the industry.

“For us in the UK, the real political uncertainty for our sector comes from the dual and interconnected possibility that the UK could leave the EU and that the UK could dissolve if Scotland voted to become independent,” he said.

“Even five years ago, the likelihood of both would have seemed far more remote than they do now, so we certainly cannot be complacent.

“On the EU referendum, the industry will be under pressure to have a collective position and I would certainly expect this to feature heavily in ABI discussions over the coming months.”

Lloyd’s CEO Inga Beale told the Insurance Europe conference in Luxembourg that leaving the EU would damage Britain’s business prospects.

“We think open trade and being part of a bigger community is very important,” she said.

“I would wholeheartedly welcome a stronger Europe, rather than countries becoming smaller and less important in the world on their own.”

The International Underwriting Association has released a statement warning an EU exit may hit UK insurers’ ability to sell policies in Europe and deter overseas players from opening London offices.