CII research shows an insurance industry split over Brexit

The Chartered Insurance Institute (CII), along with MPs Nicky Morgan and Hilary Benn are urging for the publication of the Brexit financial services position paper, as CII research reveals that the insurance and financial planning profession both consider Brexit the biggest risk to the sector.

Morgan, who is chair of the Treasury Committee, said: “The failure to publish a position paper on financial services sends all the wrong signals. Financial services will be one of the most challenging elements of the Brexit negotiations.

 “A paper articulating a clear sense of direction, and a desired end-state, could have boosted confidence that the Government is up to the task. Some level of clarity has been provided for numerous sectors. Financial services firms will be seriously concerned at the chronic state of uncertainty.”

Hilary Benn, chair of the Select Committee on Leaving the European Union added: “There is now an urgent need for clarity from the Government as to what kind of future economic relationship with the EU it will seek. This must include the Government’s plans for financial services which need to be published without delay.” 

Last Friday, Theresa May set out her stance on Brexit, reiterating that the UK would not remain in the single market and that the EU needed to take note of some “hard facts”.

The CII’s research, which involved a survey of 3,881 CII members in November 2017, reveals that the insurance industry is split over the UK-EU regulatory relationship after Brexit. A thirdd (33%) of respondednts wanted lighter touch regulation and supervision, while slightly more (36%) wanted regulation to remain close or ‘equivalent’ to the EU.

More than twice (37%) as many CII members would see a second referendum as ‘beneficial’ for their firm as those who think it would not. Only 15% of respondents felt that a second referendum would be damaging.

Almost a third (30%) of CII members felt that Brexit was the biggest risk to the sector.

Of the senior directors surveyed, almost a quarter (22%) believed it was likely or highly likely that their firms will move from the UK if no deal is made following Article 50 negotiations.

Since the previous year’s survey, there has been a slight boost to economic and business sentiment among members. Following the 2016 referendum, around a quarter (23%) of respondents expected economic and business prospects to improve, compared to a third (33%) in 2017.

Matt Connell, CII director of policy and public affairs, said: “We are pleased to see that economic confidence across the insurance and financial planning profession has partially recovered since last years’ CII member survey. We consider this healthier sentiment testament to the commitment first made by the Prime Minister in her Mansion House speech to provide business and the wider public with as much certainty and clarity as possible throughout the Article 50 negotiations.”

Connell continued: “However, our research demonstrates that the profession is divided over the nature of the regulatory relationship it believes the UK should seek with the EU seek post-Brexit. This reinforces the desperate need for the publication of an analysis of the impact that different negotiation outcomes would have on significant areas of the economy.

“The financial services sector has also expected a position paper from the Government at the very least. Outlining a vision of what the Government’s desired end state is for the sector need not undermine the UK’s negotiating position - just as the publication of position papers for 14 other areas of the economy has proved.

”We call on the Government to continue to honour the pledge first made in the Prime Minister’s Mansion House speech to provide clarity where possible by publishing its assessment of the impact of different negotiation outcomes on the economy, and to clarify the nature of the future relationship it seeks with the EU, particularly in relation to financial services.”