More than a week has passed since the EU referendum which saw the United Kingdom vote to leave the European Union, but the sense of alarm that was initially felt is starting to moderate. Property funds are still under pressure, but the dust is starting to
settle, even while the precise terms of how the UK will leave and forge a new relationship with EU are unclear.
From my perspective, the European insurance industry is better equipped to handle the fallout from Brexit than was initially feared. Indeed, the effects may be more nuanced and there’s room to consider the opportunities rather more than the risks.
For example, take the concerns over how the vote might threaten Lloyd’s of London as the preeminent market. While it is in the interest of Frankfurt and other places to talk up their potential, people are already realising that nowhere has the skills that
London possesses. Will they really want to move? I don’t think so. Even if the negotiated split with the EU is sharper than feared, London is a global insurance market rather than just a European one, with a growing interest in developing markets.
It is also important to put Brexit into context. Insurers are generally run as national rather than cross-national businesses, something that was recently
highlighted by Aviva when they stated clearly that they were not reliant on ongoing passporting rights. Brexit is also coinciding with a period of great change accelerated by technology – something I have discussed in
previous blogs. Insurtech innovations are already being designed to make the industry more agile and efficient. Such capabilities are going to be crucial as insurers adapt to how relationships within and outside the EU shift.
Naturally, a changing relationship implies the regulatory regime of the EU may become less relevant in the UK compared to other markets. Ironically these questions are being raised as
Solvency II has already gone live. Again, I don’t see Solvency II or any other EU regulations being abandoned, not least because UK regulators were at the forefront of its development.
Ultimately, it remains in the interests of the insurance industry in the UK and rest of Europe to remain positive and adhere to a business as usual mentality. That might sound dull, but business as usual right now is very exciting. Business as usual is an
innovation revolution, focused on insurers delivering better value to customers and embracing digital technology to create new products and deliver better services.