This year’s Autumn Budget by new Chancellor of the Exchequer Rachel Reeves is called “Fixing the Foundations to Deliver Change,” with targets to protect working people, fix the National Health Service, and rebuild Britain. So, how does the plan resonate with the UK insurance industry?
In the 164-page Autumn Budget 2024, “insurance” was mentioned twice – excluding references to National Insurance, which is a government tax. The first one refers to the government’s promise to publish an annual report on its contingent liabilities such as guarantees, insurance contracts, and provisions.
The only other time that “insurance” was mentioned outside the context of National Insurance was in this portion of the Budget: “The government is committed to making it easier for start-ups and scale-ups to access external sources of financial support. This includes… ensuring small businesses can access UK Export Finance’s support and exploring the need for new products to support small exporters to access the insurance and finance they need…”
The wider financial services industry, meanwhile, was previously identified by the government as among the eight growth-driving sectors for which plans will be produced as part of helping them thrive under the government’s modern industrial strategy.
“The Chancellor will shortly set out her vision for the financial services sector in her Mansion House speech, building on new remit letters to the financial services regulators which support the growth and competitiveness of the sector, and ensuring we make the most of the talent in the sector through the Women in Finance Charter,” reads part of the Budget.
Among the first to offer commentary was Marsh McLennan UK chief executive Chris Lay, who expressed disappointment.
Lay stated: “We are disappointed that the consultation on a UK captive regime has not been launched. The UK is home to a world-leading insurance market and could become an important home for captive insurers.
“At present, our current regulatory framework makes it hard for us to compete. Establishing a proportionate and competitive UK captive framework could deliver a major boost to the UK insurance market, demonstrating our innovation and signalling we are open for business.”
Zurich Insurance captives head Esme Gould similarly pointed out the absence of the subject of captive insurance in Wednesday’s Budget.
“As a major captives insurance partner, we have been calling for the government to publish a consultation on a UK captives regime, which would bring capital into the UK and could attract new companies looking to set up under a domestic regime,” Gould noted.
“The consultation was not announced in today’s Budget, but we are hopeful that it is still being considered, as with the right regulatory structures and the expertise within the London insurance market, the UK could be a popular jurisdiction for captives.”
Meanwhile David Williams, head of group risk at Towergate Employee Benefits, highlighted the government’s plan to shift “from a model of sickness to prevention,” which will involve action against obesity and ambitions towards a smoke-free generation.
“Our employee benefits industry, which focusses so keenly on workplace health and productivity, will need to ensure that the government listens to our collective voice and vast experience to help them formulate the right solutions,” Williams said.
“Employee benefits advisers and providers have been focussing on ‘getting Britain working’ for decades through a host of health, protection, and wellbeing tools provided under company benefits.”
He added: “The Chancellor cited the aim of going ‘from sickness to prevention’. The employee benefits industry focusses heavily on prevention and rehabilitation for workplace sickness, so this phrase is music to our ears. However, the detail is still light, and any investment will take time to improve NHS capacity and waiting lists.
“So, it’s crucial that, in the meantime, employers take advantage of private sector support available through their various employee benefits. The frustrating part, though, is that the increase to employer National Insurance contributions is likely to negatively impact company budgets at exactly the same time that we’re trying to encourage them to spend more on their employees’ health and wellbeing.”
The sector’s role, according to Williams, will be to ensure that employers know that everybody benefits – the companies, the employees and their families, and the NHS – if they invest in well-structured employee support services.
Further comments came from Zurich Municipal managing director Amy Brettell, whose focus was on the issue of potholes.
“[The] pledge by the government of £500 million to tackle the pothole plague and keep Britain moving is pleasing to see,” Brettell remarked. “However, while this additional funding will be welcome news to local authorities, it will only put a small dent in the number of existing potholes, never mind new ones that will no doubt appear over the coming winter months.
“Our data shows that local authorities saw a 66% increase in pothole-related vehicle damage claims last year alone, as well as an 8% spike in personal injury related accidents on cycle paths, footways, and roads.”
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