The EU Referendum – Will It affect the Insurance Industry?
On Thursday 23rd June the UK will have one of the biggest referendums in recent history to decide whether it will remain as part of the EU or spread its wings and fly solo. This poses the question of how the Insurance industry will be affected if the UK does vote to Exit the EU.
First of all, it is highly likely that an Exit from the EU will resultantly force a large shift in business location. 16 per cent of all insurance business located in London come from elsewhere in Europe. Germany, Spain, France and Italy all use London insurance businesses extensively and as a result generate £9.6 billion annually. But the real question is will this impact you, the trader in any significant way? Will insurance premiums rise or fall?
Well, to be completely honest there are arguments for both sides. As it currently stands UK insurance providers all have access to one field of data which is accessible from 28 different countries. This will change if the UK decide to exit the EU. Insurers will be required to open their branches abroad which won’t be cheap. Why is this important? Because to necessitate the cost of transfer of business premium prices will most likely have to increase.
However, just as there are two sides to a coin, there is also an argument that an exit from the EU will in fact cause premium prices to drop. Why? Because the UK would no longer be under regulations and restrictions implemented by the Eurozone. The UK would be able create its own independent trading deals and negotiate separately without being held back by prior restrictions.
Many point to countries such as Switzerland when evidencing the potential prosperity brought by the exit from the EU. Switzerland is home to an extremely stable and thriving economy and still has full participation within the EU market without being held back by regulations implemented by the union.
Matthew Elliot, Chief Executive of Vote Leave, recently explained to The Mirror that in his opinion, insurance prices would drop:
“Car insurance, though, would go down in price. A recent EU court judgement put it up. Just another example of how Brussels makes life more expensive.”