We try to mention the dreaded ‘B’ word as little as we can on this blog.
Obviously we’re doing as much planning as possible for Brexit behind the scenes, but we know that you’re probably more than a little fed up of hearing about it by now. It feels like you can’t switch on the TV or radio without hearing about deals, no deals and some fall out between Theresa May and her party/the opposition/the eu (delete as appropriate).
But, with only 29 days (at the time of writing) until the UK packs her bags and leaves on the midnight train, we thought we’d take stock and analyse the current lay of the land where insurance is concerned.
So here is what we know, don’t know and what we need to work out when it comes to an insurance Brexit.
The general feeling
As with the rest of the country, the major concern from the insurance world is the uncertainty that still casts a cloud over the whole Brexit topic. As it stands (again, at the time of writing), the UK is heading for a no-deal Brexit. That means leaving the EU on the 29th March with WTO trade terms.
And that’s an unpopular state of affairs, at least as far as ABI Director General, Huw Evans is concerned. At a recent annual dinner, he claimed that a no-deal Brexit would be ‘an unforgiveable act of economic and social self-harm that the UK would live to regret’. Some pretty powerful words.
It’s a feeling that’s echoed by large swathes of the insurance industry. Whether for or against the UK leaving the EU, most agree that no-deal is not the way to go about it.
So the industry isn’t ready for Brexit then?
Well, not quite. In truth, no one can ever be ready for something that they’re not sure is going to happen. The UK will leave the EU, but at the moment, it’s anyone’s guess how they do it.
But having said that, there are measures in place to prevent chaos and limit disruption for insurance customers.
For instance, the FCA (Financial Conduct Authority) has already outlined how it will use special transitional powers to ensure a stable regulatory environment if the UK leaves the EU without a deal, according to this article on Insurance Age.
And actually, some insurers who have already made solid preparations for Brexit, are doing really well. Hiscox, for example, trebled its profits after completing preparations for Brexit.
So the insurance industry isn’t ready, to put it bluntly. But no sector can be fully ready with so much uncertainty. Insurers and brokers have put plans in place to protect customers. We know Romero have been doing this for some time.
It’s fair to say that the insurance industry is as prepared as it can be, and as much as any other sector.
‘But some of my business is based abroad, I don’t know where I stand’
This is an issue that’s come up a lot over the past few months; what’s going to happen to British businesses with foreign risks.
Unfortunately, as with most of the Brexit conversation, the answer is ‘it depends’.
It depends who you have as a broker, who your insurer is and what country your risk is in. Back in August, the Financial Times reported that ‘most large insurers have executed contingency plans to ensure cross-border contracts are honoured if there is a no deal Brexit’.
We’ve also had news that the UK has signed a deal with Switzerland to ensure the ‘seamless continuation’ of the current regulations. A similar deal has been struck between the UK and the US, and France have published emergency insurance plans for a no-deal.
All in all, it looks like there won’t be too much disruption, and the right work has been carried out by the insurers. But when it comes to Brexit, there is always a twist and turn around the corner. Therefore the best advice is to make the most of a broker who can use their experience and expertise to guide you through this uncertain time.
In a couple of months’ time, when all is said and done, we’ll put together another one of these blogs. Hopefully things will be clearer by then. Until then, have faith that the insurance industry is doing everything in their power to continue plain sailing.