Sometime between me writing this article; you reading it; and the end of the month, it appears inevitable that Andy Burnham will become our new Prime Minister. At this point it is important to lob in the way over quoted cliché that this will make him our 10th new occupant in Downing Street (if he decides to live there) in the past fortnight (or whatever). Which means that political instability in UK is alive and well.
And there is no certainty that the Burnham coronation and a new seat of power at Manc a Lago is going to change that. Kier Starmer’s troubles began when he could not pass his welfare reforms. Despite a nominal 170+ majority in Parliament, the Labour coalition is now so broad that, individually, his MPs proved not to be that committed to their manifesto pledges. The King of the North may find himself faced with the mirror image of this problem. Within the more than 400 Labour MPs are probably sufficient Blairites, still believing that centrist, low spending government is the answer, to block the more expansionist plans he suggests he may have. Having “hope in our hearts” may not be enough to get anything done.
So volatile times will probably prevail. Indeed, depending on the odds, a small futter on Burnham not leading Labour into the next election might be a tempting investment. Look at the way the last government shed leaders who didn’t deliver an immediate reversal in fortunes. And this domestic quagmire only complements the situation overseas. In the Gulf, the “ceasefire” seems to involve an awful lot of both sides shooting at each other. Israel remains belligerent and unpredictable. The almost forgotten war in Ukraine rumbles on. Radical populist presidents in Honduras, Chile and Colombia to go with the ones in Argentina and El Salvador make Latin America potentially explosive. The calm, peaceful days of the end of history are long behind us.
So how should our industry seek to cope with all this? I think we need a multi-layered approach. There will be some self-evident truths that will need defending. IPT is a tax on ordinary people who do the right thing. Whilst it is tempting for any government desperate for funds to seek to increase the burden on something you make largely compulsory, that is simply the wrong thing to do. Furthermore, insurance is the engine room of economic growth and taxing it further will lessen its ability to deliver that service.
But we also need to proactively sell our services. As I say, insurance drives growth. The new Prime Minister needs to grow the economy to achieve his aims. So he needs us. Too much of current government policy has been focused on insurers. The financial services strategy is almost entirely about attracting new capital to London. But if that is all you do then the net result will just be to crash prices. We need to work on the demand side too. Here are two statistics. Latin America (I focus here because it is where I like to go on holiday) has an average insurance penetration of less than 4%. As a region, it makes up less than 5% of London market business. Similar numbers exist for Asia and Africa. Those two data points should spell one word – opportunity. We have a fantastic brand in North America built on the history of events like the 1906 San Francisco earthquake. We need help to build a similar brand south of the Rio Grande. We have fantastic expertise in risk management and business development. The government has the embassy network and the trade commissioners. So let us bring the two together. Organise one event a quarter in the embassy in a target country. Invite a selection of local risk managers and brokers and we will take a collection of our members out. And then let the magic happen. For the cost of a few bottles of warm chardonnay, whole new routes to market can open up. The emerging economies of those three continents will be experiencing an exponential increase in their demand for specialty insurance as they expand. London can, and must, be the primary provider of that cover. It just takes a little enterprise on the part of a new administration to make it happen.
And we need as well to address a constant bug bear of mine and many others. The language we use. “Notice of cancellation” is a brilliant approach that keeps the everyday cost of marine cover lower than it might be by allowing for the renegotiation of premium in the event of escalation of conflict. So let us find a better term for it and stop using the C word which only triggers a swathe of unhelpful articles in the business broadsheets and other places. I know the LMA is working on this and they will have LIIBA’s whole hearted support. Can we also get insurers to stop talking about “losses” when they announce their results? How about “and we have poured $Xbn into the global economy in the wake of natural disasters this year, helping to supercharge economic recovery”. It’s longer, but it does justifiably celebrate our industry in its finest hour.
So, in a twenty-first century retelling of Macbeth, Burnham Wood has come to Downing Street. It may last, it may not. But another reset at the top of government is an opportunity for us as an industry to redouble our efforts to promote the role we can play in delivering executive ambition. We can make Andy the Insurance Prime Minister. That is the hope in my heart.
