The UK insurance industry must be cautious of the many challenges and pressures currently facing the sector, which have the potential to converge and materialise at the same time to create a “perfect storm of disruption,” warns Steve White, Chief Executive Officer (CEO) of the British Insurance Brokers’ Association (BIBA).
Addressing an audience at the BIBA Conference 2017 held in Manchester, UK recently, White said BIBA is tracking a range of trends that are causing concern across the UK insurance and reinsurance industry.
Domestically, the top concerns include the recent change to the Ogden discount rate to -0.75% by the Lord Chancellor and Justice Secretary, Liz Truss, the doubling of Insurance Premium Tax (IPT) in just 18 months coupled with the threat of further increases in the future, growing inflation and the decreasing value of the Sterling, Brexit, and also the impending snap election and all that will come with it.
“Cost pressures within our industry, economic factors affecting insurance buyers, uncertainty and new competitive threats to the UK insurance market are all possible issues that we have to deal with. If a few of these storms materialise and hit us at the same time, they could create significant challenges for us,” said White.
Brexit is fuelling uncertainty across the majority of industries and with London being a global hub for insurance and reinsurance business, it’s vital the insurance sector is able to trade in Europe in the same way in a post-Brexit world. BIBA also alludes to discussions of increasing protectionism in the U.S., which has the potential to hinder and “reduce the optimism” of the proposed U.S./UK covered reinsurance agreement.
However, despite the challenges White was eager to discuss the range of opportunities the insurance industry could look to take advantage of in the weeks, months and years ahead, as London and the UK seeks to remain a global, and valued hub for insurance and reinsurance operations.
“Despite these clouds there remains plenty of better weather to look forward to. Our industry remains in a healthy state and continues to make a significant contribution to the UK’s service trading surplus. There are opportunities arising from insuretech, from autonomous vehicles and from the desire to really increase trust in our sector and we will be right behind our members as these opportunities develop,” said White.
