New Prime Minister looms – insurance industry calls for stability

Political merry-go-round "deeply unsettling" for business

New Prime Minister looms – insurance industry calls for stability

Insurance News

By Jen Frost

The insurance industry has called for stability following the exit of Prime Minister Liz Truss last Thursday, which has triggered a Conservative leadership election which is expected to be finalised today.

Truss was the fourth prime minister in six years, with her predecessor set to be the third in the hotseat in less than two months.

“I think the overriding wishes of most UK insurance broking, and business folk in general, is for stability and clarity,” said Andy Fairchild, owner of Julyfourth Consulting. “The political instability of the last few days has felt unprecedented in most of our lifetimes.”

Amid UK and global economic challenges, Fairchild called for a “clear, long-term macro economic direction.”

“More specifically, many UK insurance brokers are very dependent on a thriving SME Community, we are after all a ‘nation of shopkeepers’,” Fairchild said. “I’m sure those heartland SMEs are craving this political stability, and quickly.”

The call for stability was echoed by Aston Lark CEO Peter Blanc.

“Like the rest of the country I suspect we all just crave a return to common sense and stability; business wants to invest in an environment where we at least have a reasonable sense of what’s around the corner,” the broking boss said. “Uncertainty is a big dampener on investment which is, of course, the long-term driver of growth in pretty much every sector.”

Truss’s team had mooted plans to merge the Prudential Regulation Authority and the Financial Conduct Authority, according to reports, which could have heralded a return to the days of the Financial Services Authority, which was split up in 2013.

Given her exit after 44 days, making Truss the shortest serving UK prime minister in history, insurance sources were doubtful that any such plans would come to fruition.

 “As for the regulator, I would imagine they will also be feeling uncertain as they would, I’m sure, prefer stability in government so that they can focus where ministers want them to focus,” Blanc said.

“I suspect that the current flux state of government will rule out any significant changes with the regulator for the time being. We, on the other hand, will just get on with looking after clients and trying to help them to navigate this mad world.”

The current political situation was likened to a state of “limbo” by Matthew Maxwell Scott, Association of Consumer Support Organisations executive director, Conservative councillor for Lancaster Rural East and former Conservative candidate for Carshalton & Wallington in the 2015 and 2017 general elections.

“Let’s assume Jeremy Hunt were to continue as Chancellor, because I think the markets would take fright if there was any other outcome, but beyond that – do we know whether the Justice Secretary or the Business Secretary, Transport Secretary or any of the other people in senior cabinet positions whose jobs are essential for a good trading environment for insurance and others are going to continue in role?” Maxwell Scott said.

Of particular concern for ACSO are civil justice changes and personal injury reform, with the group having campaigned around the Official Injury Claim portal that launched last year.

“The one constant in all this chaos is the officials, and I don’t think that should give any observers of the situation particular comfort, because they have not shown in recent years the sorts of consumer focus or commercial understanding that makes for a sustainable robust system that encourages lower frictional costs and better client satisfaction,” Maxwell Scott said.

“We were in need of a champion, but it’s pretty unclear where that champion is going to come from.”

It is “pretty unlikely that [a merged PRA and FCA] is back on the drawing board” under any new premier, Maxwell Scott said.

“I just think these sorts of issues are very low down the agenda for a government that is looking, probably laser like, at the timing, messages and outcomes of the next general election, which could be more than two years away,” he said.

“But it would be a brave commentator, who didn’t suggest that it might be rather sooner than that, given the upheaval we’ve had.”

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