However, what does it all mean for the insurance industry? On a day in which Lloyd’s outlined its own post-Brexit plans, including the idea of moving some operations to Europe by April, the Insurance Business news-desk was awash with comment and discussion.
Keith Richards, managing director of engagement at the CII, pointed out that “economic confidence across the insurance profession is at its lowest level since 2011 and nearly half (48%) of those working in insurance expect the economy to deteriorate in 2017.” However, he nevertheless saw positive signs from Theresa May’s speech.
“Although the Government has not offered the defined transitional period that we were asking for, it has acknowledged the risk of an economic and legal ‘cliff edge’ and the impact it could have, and proposed a ‘phased period of implementation’ to give firms that much needed breathing space to consider what the new EU-UK partnership could mean for them,” he said. “However, she neglected to mention anything about time limits.”
Meanwhile, Ivor Edwards, corporate insurance partner at law firm Clyde & Co, believes that the insurance industry in the UK “won’t be unaffected or remain unchanged” by Brexit but it is “large and robust enough” to survive.
“Her specific focus on maintaining freedom to provide financial services across borders and talk of a phased approach will be welcomed by insurers and other financial services firms, all of whom crave clarity, stability and a sense that their interests are being represented,” he said. “On that basis many will simply be relieved that the phoney war is nearly over.”
Indeed he believes it is not just UK insurance companies that are affected by the decision – but those throughout Europe.
“Planning for Britain’s exit from the EU is well underway as insurance carriers believe they need to take concrete steps for all eventualities by setting up carrier companies in EU27 countries,” he explained. “It's not only UK based companies that are affected and who are making plans. There are over 500 general insurance companies headquartered in continental Europe who passport into the UK that need to take steps too.”
Finally, examining the potential market impact, Nigel Green, founder and CEO of deVere Group, noted that “confirmation of a hard Brexit will trigger several years of ongoing uncertainty” and should prompt investors to go global.
“The markets detest uncertainty,” he explained. “As such, investors should take precautions against a potential fall in the value of UK assets and avoid firms dependent upon UK-only earnings.
“Investors can achieve this by increasing exposure to non-UK investments, such as international stocks, bonds and property.”
Lloyd’s confirms European move plans
Insurer says over 50 UK firms may move to Ireland post Brexit
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