After a few of the most topsy-turvy weeks in recent UK political history, we voted to leave the EU and as the repercussions of this decision played out we now also find ourselves with a new Prime Minister. This new leader is Theresa May, former Home Secretary and the first female Prime Minister of the United Kingdom since Margaret Thatcher.
These recent political shakeups will have a dramatic affect on many different areas of the UK, from education to welfare and, of course, our relationship with our European neighbours. But what does it mean for the insurance industry and, more specifically, our insurance policies? It’s still early days, which makes it hard to tell the long-term effects but there are two very important factors to consider.
The first thing to consider is that despite siding with “remain” during the run up to the Brexit vote, Theresa May has stated she is committed to acting upon the wishes of the British public in negotiating a separation from the European Union. While the exact logistics of this are still uncertain, this announcement has caused a wobble in a number of financial markets, including the insurance market.
Another effect of the UK’s withdrawal from the EU on the insurance industry wil be the loss of “passporting”, which is the ability of banks and insurers to operate in all member states without the need to obtain separate authorisation in each. This won’t really impact upon typical home or motor insurance policies but for businesses trading or operating overseas, this could drive the price of premiums up to accommodate for these extra costs.
The second important thing to consider is that unlike many other politicians, Theresa May has actually been fairly involved in the insurance world in the past, passing laws and taking a direct interest in certain areas of the industry and how they affect customers. In 2014, as Home Secretary, she was integral in introducing a complete ban on UK insurers paying out claims linked to ransoms paid to terrorist organisations but the law was less clear when it came to areas like ransom payments in order to release kidnapped individuals. The impact of this law upon ordinary people was very small but it did show May had a close eye on the insurance world.
More notably when May’s constituency of Maidenhead suffered serious flooding in 2014, she published a document on her website regarding the issue of insurance for flood victims in order to address some of the shortfalls of the Flood Re program. This involvement has continued until as recently as March of this year when she met with the chairman of the scheme ahead of its introduction in April. After this meeting, she said “It was useful to meet with Flood Re and hear about how the scheme is set to help local people in the Maidenhead constituency. Some households struggle to access affordable flood insurance and I hope that the situation will improve after Flood Re has launched in April”.
So what does all this mean? Well firstly, it means that there are no certainties, especially until the effects of the Brexit vote become clearer, though there might be some mid-term impact upon insurers if things do not immediately bouce-back, with the effects more likely to be apparent for businesses that operate internationally in some way.
Secondly, it means that our new Prime Minister has previously had a close eye on the insurance world, closing legal loopholes and looking to improve the situation for customers. This involvement will likely take a back seat as she assumes her new position but it also means that she might continue to take a more immediate interest in the affairs of insurance companies and their clients than her predecessor – at least, she might do once the Brexit has been sorted out.