With the referendum over the UK’s future in the EU looming, Insurance Age gauges how the European insurance community views the vote
As the debate rages in the UK over whether to vote Brexit or Bremain, Insurance Age has surveyed members of Worldwide Broker Network (WBN) to see what the reaction has been across Europe.
Nineteen members shared their views anonymously creating a fascinating overview of the sentiment of our continental cousins ahead of this crucial vote.
In the UK the debate has been highly polarised. Melanie Hampton, managing director at Alexander Miller Insurance Brokers, and Dominic Burke, group chief executive of JLT, were among the 110 City business leaders who signed a letter to the Evening Standard backing the Vote Leave campaign ahead of the upcoming EU Referendum on 23 June.
“The insurance industry is incredibly well developed and has been, if not the leading market in the world, then certainly near it,” Hampton told Insurance Age. “Independence to carry on doing what we do well is what we should be trying to achieve.”
Lloyd’s chairman, John Nelson, has gone on record on the importance of membership of the EU, both to the specialist market place and the wider economy. Last month he took aim at some of the assertions being made by the leave campaign, saying it was “irresponsible of politicians to pretend that the benefits of a single market can be replicated outside of the EU” and that leaving would not create “regulatory nirvana”.
He argued: “As regards negotiating bilateral trade agreements to replace the umbrella the EU provides with many countries, it is unrealistic (or in the words of John Major “fantasy”) to expect the UK to be able to put itself in the same position as the EU trading bloc with these countries. Again, these agreements (of which there would need to be many) would take many years to negotiate.”
Respondents to Insurance Age’s survey gave an almost uniformly positive view of the EU. As the box above shows nearly all are based in countries within the community and only one said that they felt it did not benefit their firm.
When asked if they believe that the UK will vote for Brexit there was a high degree of certainty with 82% predicting the electorate will opt to remain in the EU – see box below.
The debate has understandablydominated the news agenda for weeks in the UK. However there was a split in the responses over the levels of press coverage across the continent. Analysis by Insurance Age of the written responses showed 53% of respondents reporting their press covered the referendum infrequently/rarely while 47% said their media addressed the issue regularly/daily. One broker noted that in his country the main story from the UK was Leicester City FC. Across the board participants said they expect the level of coverage to rise dramatically in the lead up to the actual vote.
As the box below reveals there was a mix of opinions around what impact a Brexit would have on the UK insurance industry.
Those advising against a departure cited uncertainty and instability as likely outcomes of Brexit, as well as years of debating around changes to regulation.
“Most FOS [Freedom of Services] policies are placed out of London/UK. This will probably change for the future with loss of income to the UK insurance industry to follow,” noted one respondent.
Another warned: “It would be terrible as it would probably isolate UK/Lloyd’s and make transactions and capital flow more difficult and expensive… other financial centres (Paris, Frankfurt) would probably jump at the opportunity and create a hub for imitating and competing with London.”
On the flip side, others opined that the importance of the UK market was such that the EU would have to find a way to make the situation work.
“London was a centre of insurance long before the EU and I believe it will remain so whether the UK are members or not,” one broker stated.
Another pointed out: “If Brexit does happen, I’m not convinced it will have that major an effect on the UK. If one looks at trade between Germany/France, it’s enormous. Those two countries at the centre of the European project are not going to allow that trade to be affected and an accommodation will be found.”
The final question surrounded the impact on the respondent’s own firms. There was near unanimity on what Brexit would mean. Two stated that it would be negative for them while one WBN member said it could actually be positive with increased flows of business. The vast majority, 84%, took the view that they personally would see no to little impact within their firm, noting they could if needed draw upon other mature markets.
That said there was one major fear, that of contagion.
As one broker concluded: “The basic idea behind the EU is to provide political stability within Europe. And this political stability leads to economic prosperity and wealth. A Brexit could damage political stability in Europe, leading to negative economic consequences.”
While the brokers polled believe that Brexit will not happen and that professionally they could cope with any changes around access to the UK markets, with the fear of a knock-on economic impact, they will certainly be following the vote closely.
To read co-founder of Worldwide Broker Network (WBN) and chairman of Lloyd’s broker AFL Insurance Brokers Alec Finch’s response to the survey click here
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