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On Thursday, June 23, 2016, a public vote was held in the UK. The referendum asked one thing: should the UK leave the EU or stay?
Each and every Britisher’s and non-Britisher’s eyes were trained to the TV to see what the result would be.
Leaving won by 52% to 48%.
More than 30 million people turned up to vote and 17.4 million out of them opted for Brexit.
Brexit was set to happen by 29th March 2019 but the opposition shot down the proposals put forth by Theresa May’s government multiple times. As a result, to prevent a no-deal Brexit, there were multiple extensions granted by the EU, with Brexit finally taking place on 31st January 2020.
All this time, the media and people have been speculating about the ramifications of Brexit. As the date for the same approaches, we dived into uncovering what the move will mean for the insurance industry. Below, we share the crucial insights that we uncovered.
What Brexit will mean for the insurance industry
The UK’s insurance sector is a significant player at the global level. It manages investments of £1.8 trillion and employs 300,000 individuals. Thus, due to the degree to which the UK and EU financial systems are interwoven, the insurance industry might be heavily impacted. Below, we take a look at some of the specific ways of this impact [1]:
Impact on market access
Previously, UK-based insurance companies could offer and access services anywhere in the EEA. No authorisation was needed before.
To smoothen the Brexit transition, UK has offered a Temporary Permissions Regime (TPR). EEA firms who were doing insurance business will be able to continue doing the same for a maximum of three years. In these three years, however, they’ll have to obtain official authorisation. Consequently, there will be no disruption to the services.
Impact on regulations
The compliance burden on insurance firms might increase in the long-term. This is because post-Brexit UK won’t have to adhere to the regulations and policies of the EU. The UK will be able to make and implement its own regulations.
Currently, there are no indications that the UK will be making any changes to the regulatory landscapes. However, in the long run, changes might crop up. Insurance firms will have to make time and allocate resources to smoothen processes.
Impact on the workforce
Insurance companies have a highly mobile workforce. With offices set up in different locations in the EU, the mobility of talent and resources between countries is commonplace.
Post-Brexit, immigration changes will need to be factored in, else delays and increased costs might mess things up. Recognition of professional qualifications might also take a toss.
Out of the myriad areas that will be affected by Brexit, we’ve only listed three above. The solution to all of these, however, remains consistent which we explore in the next section.
The great stabiliser of Brexit: Technology
Being an insurtech company, we are strong believers in the power of technology to solve specific insurance challenges.
Discussion around Brexit including its delay was an obstacle in increasing the ranking of the innovation. But now, with increased clarity, the speed of navigating through Brexit will be key for players to become leaders in their market.
Price Forbes [2] agrees and outlines the ways in which technology can be an empowering tool during the transition time of Brexit:
- To begin with, the UK insurance industry has finally emerged out its cave and is actively partnering with tech startups to forge a new way forward. It is using these technological tools to improve customer experience and manage risks in a better way.
- London’s Lloyd has made an open commitment to upgrading technology usage to further upgrade efficiency and customer service.
- Due to these continued innovative efforts and approaches, the UK can emerge as an insurance market leader. The insurance sector will also attract foreign investment as a result and continue to flourish post-Brexit.
With Brexit completed, predictions and assumptions about the future will only grow in number. The reality, though, will only be truly comprehensible over time as the shift happens. Brexit will be what each company makes of it.
As we move into the transition period, though, there won’t be any significant changes to day-to-day business activities until 31st December 2020. The best we can do is carefully navigate through these uncertain waters with the help of technology. That’s how success is ensured.
[1] Report by Deloitte [2] Price Forbes
