Insurers breathe sigh of relief as election delivers certainty

The results are in – Prime Minister Boris Johnson and the Conservative party remain in power after yesterday’s Christmas general election, winning 364 seats for a majority government.

The latest figures from PA Media show that the Tories took a 43.6% share of the votes, compared to the Labour party’s 32.3% - Jeremy Corbyn’s group won 203 seats in total.

The Scottish National Party (SNP) collected 48 seats and a 3.9% share of the votes, while the Liberal Democrats, led by Jo Swinson, won only 11 seats with an 11.5% share of the votes. The Green Party only has one seat after last night’s result.

The final vote count for the Conservative win totalled 13,941,200 versus Labour’s 10,292,054 votes.

For the insurance sector, the election result provides a reassuring clarity for the new year.

Jeanette Newman, partner at Clyde and Co and the vice president at UK FOIL, said: “The key thing this result delivers for the insurance industry is a greater degree of certainty than we’ve known for three years. It puts us on track to depart from the [European Union] at the end of January followed by an 11-month transition period.

“However, we need to be clear that the spectre of a ‘no-deal’ at the end of the implementation period next year is still hovering over the Conservative’s celebrations. The French insurance supervisor has already begun to question British insurers’ ability to pay claims in Europe post Brexit, which is a taste of potential regulatory machinations still to come.

“On the domestic front, the environment in which businesses like ours operate will remain fairly stable. In terms of taxation and governance, it’s steady as she goes.”

Industry reaction

Peter Blanc, group chief executive at Aston Lark, told Insurance Times: ”The main upside here is that we will at least have a functioning government with a workable majority. I think all of us in business appreciate that making decisions and acting on them is completely vital - uncertainty and inaction are the killers of progress.

”As such, regardless of which party each of us may support, I think this is a much better result than a hideous hung parliament with further delays to Brexit and ongoing uncertainty.

“As the insurance profession, we now need to redouble our efforts to ensure that we are able to agree ease of trading with our European neighbours, even if it stops short of full passporting. Issues such as Green Cards, EHIC cards for medical assistance and the ability for brokers to place business seamlessly in European markets and on behalf of European customers need to be top of our wish list. Letters to Santa might help.”

Biba’s executive director Graeme Trudgill said that although the professional body is politically neutral, it has “enjoyed constructive and productive relationships with the Conservative government over the last few years and we look forward to continuing our representation work with the relevant ministers and MPs.”

Huw Evans, director general at the ABI, added: “There are urgent challenges facing the newly elected government where we can help deliver much-needed reform, whether it is ensuring we have a retirement market that serves for our ageing population, much-needed reforms to fire safety to protect vulnerable people or investing in the changes necessary to tackle climate change. I hope new ministers face into these issues with a sense of urgency.

“Having been given a renewed mandate to leave the European Union, the government now needs to focus on how it ensures an orderly withdrawal and a sustainable future relationship with our European neighbours. Such a relationship should not involve becoming a long-term rule-taker of the Single Market we will be leaving in six weeks’ time.”

Matthew Maxwell Scott, executive director at the Association of Consumer Support Organisations (ACSO), said that Conservative MPs will need to put their ears to the ground if they wish to retain newly won seats in the north of England.

“Having captured a vast swathe of new seats in the Midlands, North and North East, the government must take the concerns of people in these areas more seriously if they want these to be lasting gains,” he said.

“Financial vulnerability, mis-selling and fair claims systems are all part of that, and that means meaningful investment in our civil justice system. We’ll be working hard to impress upon MPs of all parties that you ignore the consumer at your peril.”

A spokesperson at Aviva added: “We look forward to working with the new government. There are pressing challenges facing society that we can help the government tackle, whether from climate change or providing a better retirement for an ageing population.”

Confirming Brexit

The election result has, hopefully, eliminated vast amounts of uncertainty that UK businesses have been facing related to the UK’s exit from the European Union (EU).

Richard Colwell, head of UK equities at Columbia Threadneedle Investments, explained: “The strong Conservative victory has removed political uncertainty from the UK – and one thing markets dislike is uncertainty. This means that whatever type of Brexit we eventually see, we know that the Conservatives now have a mandate to deliver our exit from the European Union.”

TheCityUK’s chief executive Miles Celic added: “With a January Brexit now all but certain, both sides must move quickly to prepare for the next stage of the negotiations.

“The first phase has been dominated by the impact on goods. This has neglected the 80% of the UK economy made up of Britain’s world leading services industries. Ministers should seek to rectify this, consult widely, and focus their efforts on how the UK’s global leadership in services industries like ours can be sustained and enhanced over the course of this parliament.”

Business clarity

Brokerbility’s executive chairman Ashwin Mistry believes the election result provides the insurance industry with a much-needed boost; he said that from a brokering perspective, “our clients have been crying our for clarity.”

He added: ”One thing we needed was certainty - a hung Parliament would have been catastrophic. This landslide means that businesses can now make informed decisions now they know Brexit is going to come. They can start looking at decisions they were holding back on before.

“We should see greater clarity on issues such as corporation tax rates, but the devil is in the detail. We await for the first 100 days to see what Brexit may or may not look like.”

Anthony Baker, president of FOIL and partner at Plexus Law, said: “A significant Conservative majority and thus certainty in Parliament is positive for the insurance industry. With regard to the size of the majority and thus a clear mandate to govern then legislation will get passed. We will also now see in 2020 the progression and delivery of the whiplash reforms, as a major part of the Civil Liability Act. These reforms were potentially at risk if there had been an alternative election result.

“Brexit was the primary platform of the Conservative election campaign and there is still much to be clarified on the form it will take. In reality, leaving the EU is just the starting process with the changes to the UK’s law, regulation and business environment still to be determined. From a legal perspective then there will be a number of impacts from Brexit affecting the regulatory landscape and the potential impact on the motor insurance sector.

“With the Conservatives winning a number of previously safe Labour seats then there is also potential for greater investment in public services, which may have knock-on added benefits for the insurance industry, for example improvements to the road/rail infrastructure, and we will see if the new government also deals with the thorny issue of potholes.”