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Ex-spymaster plays down Brexit threat

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Brexit is a “sideshow” and will have minimal impact on the London insurance market, according to the former head of spy agency MI6.

Richard Dearlove, now Non-Executive Chairman of Ascot Underwriting, says the London industry is global, so the effect of the UK leaving the European Union will “probably be very small”.

Lloyd’s decision to set up an EU operation was “nice publicity but not essential”.

Mr Dearlove, who led MI6 from 1999-2004, says international business has shown an unexpectedly high tolerance for political risk and markets are relaxed even as “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,” he concluded.

In a keynote speech at the MMC Rising Professionals Global Forum in London, Mr Dearlove identified a variety of risks threatening to reshape the global political landscape.

He warns 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. “The world faces the challenge of having to create a new international order over the next decade.”

Relationships with China will be central to a successful transition, but the former spy chief warns allowing Chinese telecoms giant Huawei to help build the UK’s 5G network poses a national security threat.

“China is a very aggressive intelligence collector and it uses technical capability to collect continuously,” he said, adding insurers face daily attempts from China to obtain their intellectual property.

Speaking at the same event, Dan Glaser, President and CEO of Marsh & McLennan, said a heightened state of flux has spawned an “age of risk” and elevated the risk industry’s importance to new heights.

“There is no better time to be in the risk business than right now,” Mr Glaser said, adding the world faces “profound” threats from climate change, unfunded social liabilities, religious fragmentation, water scarcity, cyber crime, artificial intelligence and robotics.

This has placed every company and country in a state of “VUCA” – volatility, uncertainty, complexity and ambiguity.

“There is no sense of security any more,” he said. “Nothing is sacred, nothing is safe, but anything is possible.”