The UK insurance industry is an integral part of the economy that enjoys a £21 billion trade surplus with the rest of the EU and employs around 330,000 people. With those figures in mind it is easy to understand why the majority of the insurance industry favoured remain.
The ‘Leave’ vote renders the sector having to navigate uncharted waters and it is clear that we will need to carefully manage the referendum outcome. So far for the insurance industry it has been business as usual.
Britain has not yet formally notified the EU of its intention to leave and once we have we will have a further two years to fully extract ourselves. With that time frame in mind the Association of British Insurers have reassured customers with insurance and long-term savings products that there is no need for them to take any immediate action.
The British Insurance Brokers Association (BIBA) have stated that they plan to work with government to ensure the best interests of insurance brokers and their customers are fully represented during the exit negotiations.
The talks will be crucial to continuing the UK insurance industry’s Global success story and ensuring premium stability for its consumers. In the re-negotiation of its trade agreements with the EU the large insurers with high levels of capital reserves may be better protected.
Giants of the industry AXA and Aviva have issued statements confirming that the outcome of the referendum will have no impact on their commitment to their UK operations. This is good news for their clients and motor trade combined policy holders in general should largely be safeguarded as they are often held by larger insurers.
Clients that trade from home on road risk only policies are more likely to be covered by smaller providers. Though these insurers might not have the capital reserves of their more established counterparts their greater agility should aide their efforts to manage the fallout well.
Like the result, it will be difficult to predict the impact on motor trade insurance premiums. Costs will no doubt reflect the UK economy’s performance as a whole but speculating which way that will go at the moment will just add to the uncertainty.
Fortunately for our motor trade clients we have relationships with over a dozen leading motor trade insurers. Therefore if following the negotiations an individual insurer struggles we will be able to minimise the impact by sourcing a competitive alternative.
Ryan Georgiades, Managing Director of Plan Insurance Brokers
The Motor Trade Industry Responds to Brexit
The motor trade made it clear that as an industry it overwhelmingly supported the remain campaign. A long list of manufacturers that included Jaguar Land Rover, BMW, and Toyota declared in favour of a ‘Remain’ vote. Only three days prior to the referendum saying Society for Motor Manufacturers and Traders stated that staying in the European Union was of ‘critical’ importance to prosperity of the UK automotive industry.
Following the out vote the SMMT have issued a reports showing that the UK Automotive generated a record £71.6 billion turnover in 2015. SMMT Chief Executive Mike Hawes has urged the government to keep Britain open for business,
This success has been due to unrestricted access to the single market, input to EU legislation to safeguard the interests of UK Automotive, and the ability to recruit talent from abroad.
Hawes issued a rallying cry to our politicians to tackle any risks to these benefit head on.
Motor Trade based reasons for optimism
CEO of Aston Martin, Andy Palmer has at least reconfirmed the company’s commitment to build a new £200m factory in South Wales. However they will need to implement a number of additional ‘productivity and efficiency’ initiatives following the outcome.
Rolls-Royce have also reiterated their loyalty to the UK despite the result not being ‘the outcome the company would have chosen.’ Positive news when you consider that the jet engine and car maker employs 23,000 people. Though, the news was tempered slightly by an admission that their long term investment would be dependent on the nature of the post Brexit negotiations.
Impact on Motor Trade Importers and Exporters
It’s been pointed out by market analysts that manufacturers who lack any UK production centres will be amongst the most vulnerable due to the plummeting value of sterling.
These companies that include the likes of PSA Peugeot Citroen will be unable to offset revenue lost due the decline in the UK’s currency against reduced production overheads. Potential price increases by the French manufacturer will be bad news for their car showrooms who will no doubt have been hoping to maintain sales volumes amid fierce competition.
Nissan’s chief executive Carlos Ghosn has added nothing since his pre-vote warning that a leave vote could hit investment. The firm is considered by many experts to be among the most exposed due to its Sunderland factory plant serving Europe and beyond.
Britain’s largest vehicle maker Jaguar Land Rover said ‘nothing will change for us or the automotive industry overnight’. However sources told Reuters that the Indian-owned firm fears Brexit will have £1bn removed from annual profit within a few years.
In other developments, representatives from the country’s largest business sectors which includes the automotive industry, will be meeting with Business Secretary Sajid to discuss plans moving forward. Javid said:
I, along with most business leaders, wanted the UK to remain in the European Union. But a clear majority of the country has voted to leave – the people have given the Government their instructions and it is our duty to carry them out.
We will continue to update with relevant news and insight following the leave camp’s victory as and when we learn more.
Read more: The Brexit Debate: Motor Trade Industry