Biba blog: Keep smiling through

It was Benjamin Disraeli, a Conservative Prime Minister from a bygone age, who said: “There is no education like adversity.” Disraeli’s statement is just as true today as it was then, and – as our new coalition government sets out its planned £6bn in spending cuts – boy, it looks like the UK is set for quite an education, and an arduous one at that. Already the unions are talking of the fight ahead, the possibility of a double-dip recession and devastation to front-line services in teaching, social care and hospitals.

The government refers to all this as an age of austerity, and while I believe Mr Cameron has acknowledged that businesses have been in this real-world environment of cost-cutting for the past two years because of the banking crisis, there needs to be a real recognition that this is about the cost of government.

We shall undoubtedly experience more gloom and doom as a result of the emergency Budget set for 22 June. Enforced economy is never a happy place to be, and job losses are inevitable and very regrettable for the individuals and their families who are affected, but something has to be done.

Government must not just take the easy option of increasing taxes, however. We cannot and must not keep trying to tax individuals and businesses as a means of resolving this crisis. Businesses and individuals create tax revenues, and we must ensure that any austerity measures do not encourage a reduction in their management of risk and insurance protection in an attempt to control increasing costs.

Yes, it is a fragile economy and there is a real chance of a summer, and possibly a winter, of discontent, but with the right motivation and incentives we can look beyond this period of cost-cutting to expansion and growth.

We live in an ever-riskier environment, and it is essential that government understands the need to support good risk management and insurance protection by both businesses and individuals. This is the message that Biba will be taking to MPs, the Treasury and other stakeholders.

As I stated at the Biba conference last week, the insurance broking distribution channel is the catalyst for a competitive general insurance sector and is part of a healthy economy. It touches every part of individual and business life.

Other messages to government must, of course, include the need for continuity, certainty and stability. All too often, the UK fiscal environment for the insurance sector has not meant certainty around future changes and taxes, all of which have seen organisations moving away from London and the UK.

There is not much to laugh or even smile about, but we must stay positive, particularly in hard times where the need to identify and highlight our customers’ risk, manage that risk and, of course, respond to the opportunity to provide them with insurance protection is never more important.

Eric Galbraith is chief executive of the British Insurance Brokers' Association (Biba).