The Impact of Brexit on the UK Insurance Industry
The uncertainty surrounding Brexit is having significant ramifications on many UK industries, including the insurance market, impacting both businesses and individuals nationwide. Currently all of the possible outcomes are pure speculation, but the possibility of a no deal scenario is casting doubt over the insurance sector with some of the largest British insurers suffering a 15% drop in share price immediately following the 2016 referendum.
What are the possibilities for the UK insurance industry when we leave the EU at the end of October?
Currently, the UK invests £1.8 trillion in the insurance industry, making us the third largest insurance investor in the world. By leaving the single market, the UK risks losing the right to underwrite policies freely and provide insurance anywhere in the EU without limitation. The potential impact of these restrictions could damage the UK economy, reducing the £18 billion of taxes brought in by the insurance industry. There is also an increased risk to the jobs of the 300,000 people who work in the industry in the UK.
Once we leave the European Union, we will no longer be bound by EU laws. The UK government will be free to outline their own rules and regulations, rather than the Solvency II policy which dictates the EU regulations. The European insurance products are dictated by this policy, including vehicle, home and business insurance policies.
If the UK is no longer an EU member state, the insurance industry will not be required to comply with their strict compliance legislation. For example, the EU has stringent gender directives which prevent women drivers receiving lower car insurance premiums despite proof that they are safer drivers. Client: Robison Date: 29th August 2019 Copy Type: Website SEO blog page Keyword Focus: Keywords Keyword Frequency Volume (Average Monthly Searches) Keyword Difficulty CPC ($) Competitive Density Impact of Brexit on UK insurance industry 50 64.79 0 0.07 Page Title: The Impact of Brexit on the UK Insurance Industry
Unfortunately, whilst the UK will be able to create its own rules and regulations, they will also be required to develop new policies, documents and literature. As a result, insurance providers and brokers will have to accept high short-term costs.
Post Brexit, the UK and EU will still be required to work together to maintain insurance coverage. There are two key examples of models that work effectively despite not being part of the single market: Switzerland and Norway. This proves that there are effective methods of working with the EU that the UK could mirror. However, the inability to directly influence EU legislation will mean that there is a risk of being more tightly controlled than prior to Brexit.
In addition to impacting UK insurance companies and brokers, there is a high likelihood that financial services businesses from EU countries that have a base in the UK may choose to leave. Despite this, the uncertainty over Brexit makes it unclear whether or not it will negatively affect the financial services sector.
As an experienced broker working across a range of policy types, we are well equipped to deal with any impact that Brexit may have on the industry. Whatever your circumstances, we are here to help. Contact us today for advice or a quote for your business or personal insurance policy on 01730 265500 or email email@example.com
Robison is an experienced business and personal insurance broker based in Petersfield, providing advice and services to businesses and individuals within Hampshire and the surrounding areas. Our highly trained staff are on hand to offer support and guidance, benefiting from a wealth of experience working with businesses across a vast range of industries. Whether you are looking for public liability insurance or a whole of life insurance policy to protect your family should the worst happen, our team can offer tailored advice and services no matter your requirements