Pretty much all we know about Brexit so far is that it is – we think – coming. When it does, it has the potential to bring about momentous change. So how can the industry prepare for the unknown, and how well is it doing on that count?
“Insurers planning their business have to have a plan in place at least for the worst case,” Mathew Rutter, insurance advisory partner at law firm DAC Beachcroft, told Insurance Business.
The government’s messaging around Brexit is “warmer” now than it had been previously, leaning towards the idea of a transitional period of change. But with a great deal of uncertainty still shrouding Brexit, it’s wise to plan for the worst, according to Rutter.
“In terms of planning, nothing really has changed right now – we haven’t had Brexit, so there’s no short-term impact. In the longer term, one has to assume a hard, unmanaged, uncontrolled, crash-landing Brexit. Not because you think it’s the most likely outcome necessarily, but because that’s the scenario it makes sense to have a plan in place for,” he explained.
So far, the insurance industry seems to be doing as much as it can ahead of an exit from the European Union – indeed we have already seen many of the larger insurers scrambling to announce their post-Brexit bases for passporting rights.
But there are grumblings from insurers that there is a lack of support from regulators, according to Rutter: “I think there is a bit of growing frustration that the UK regulators aren’t perhaps being as helpful as they could be,” he began.
“Bearing in mind this isn’t something that the insurers want to do in an ideal world, this is something that has been forced upon them, and you would hope that the regulators would throw a bit more resource at it and be a bit more cooperative in helping speed that process along.”
Overall, regulators are “not moving as quickly” as insurers would like, Rutter said, but the industry is pressing on with its own plans regardless.
“I think [insurers] are as well placed as they can be, but they are slightly at the mercy of the courts and the regulators, including the regulatory authorities in whichever state they’ve chosen to set up in,” he said. “That’s one reason they needed to start as early as they have, to give as much leeway as possible should things not go entirely smoothly.”
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