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* Trade body ABI among those highlighting uncertainty
* Concerns over ability to sell across bloc
* Lloyd's flags potential cost hit to syndicates
By Carolyn Cohn
LONDON, June 4 (Reuters) - Insurers are getting nervousabout the possibility Britain may leave the European Union,fearing it would curb their ability to sell policies across thecontinent and jeopardise years of work on a common regulatoryframework.
Britain's new Conservative government has committed toholding a referendum on EU membership by the end of 2017. Thethreat of a British exit, or "Brexit", has particularly alarmedthe City of London financial district, which fears a loss ofBritain's clout in European and global markets.
The Association of British Insurers and InternationalUnderwriting Association have in the past week expressed theirconcerns. They echo those of Gerry Grimstone, chairman ofStandard Life and TheCityUK, which promotes London as afinancial marketplace.
British insurers, which had 50 billion pounds ($76.2billion) in income in London in 2013, are primarily worriedabout their ability to sell across the 28-country bloc withoutsetting up full offices or reporting to regulators in eachcountry.
"The loss of those passporting rights could be a significantissue," said Catherine Thomas, analyst at insurance ratingsagency A.M. Best, citing the cost should they be forced toestablish EU-domiciled subsidiaries to sell there.
There are also worries about a loss of British influenceover the creation of new rules to govern the amount of capitalEU insurers will need to set aside to run their business, knownas Solvency II, and which are still being thrashed out.
Most of those arguing for Brexit want Britain to remain inthe European Economic Area, which includes Iceland,Liechtenstein and Norway as well as the EU countries.
The trade area would still have to comply with Solvency II.
"The main concern is that of being bound by EU rules withoutbeing able to influence them," Thomas said.
LLOYD'S LOSS
Despite concerns around passporting and the future rule-bookfor the industry, most individual insurance companies contactedby Reuters declined to comment or said it was still too soon toforge concrete plans to handle a possible EU exit.
While short on specific details, Standard Life said it"believed strongly in the Single Market" and would "takewhatever action was necessary to protect the interests of ourcustomers, shareholders, employees and other stakeholders".
Fellow industry heavyweight Legal and General,meanwhile, flagged Brexit as "one of theregulatory/economic/political risks we have identified", butsaid it would be "premature" to say it had contingency plans inplace.
British support for staying in the EU has risen to 55percent, up 9 percentage points from two years ago, according toa Pew Research Center survey published this week.
If passporting rights were denied to UK firms, MarkNicholson, director of insurance at Standard & Poor's, said somewould likely set up European subsidiaries in the transitionperiod from the referendum to a full British exit.
Many, such as industry leaders Aviva, Prudential, RSA and Standard Life have operations aroundthe globe and would probably be able to adapt quite quickly.
For the Lloyd's of London insurance market, however, theissue is more stark, prompting the 300-year old institution tocome out fighting, flagging the costs involved if its 96syndicates had to set up multiple new offices to keep trading.
Inga Beale, Lloyd's chief executive, told a conference inLuxembourg last week that leaving Europe "would be bad forbusiness," adding: "we think that open trade and being part of abigger community is very important". $1 = 0.6558 pounds) (Editing by Simon Jessop and Keith Weir)
