Hardly a week goes by in which the UK’s economic position doesn’t come under scrutiny, with any drops or inclines attributed to the EU referendum and Brexit.

Teresa May is being urged to drop appeals to the High Court over the EU Referendum over concerns that it will further delay the start of Article 50 – extending the period of uncertainty faced by so many businesses.

It’s been 5 months since a monumental vote shook the UK, and many businesses are finding it difficult to make decisions with so little information on how Brexit is going to impact the future of their trade.

Risk and uncertainty form the nuts and bolts of insurer businesses, yet the industry remains just as uncertain as any other sector. Underwriters build their business on preparation, but preparing for the unknown, on an unprecedented scale, is a more of a challenge.

This is where insurance businesses need to be flexible, and ensure that their processes are adaptable, in order to cope with market fluctuations. Robert Gothan, CEO and founder of Accountagility explains more,

“UK businesses need to prepare for potential changes to legislation in order to avoid being caught out later on. More than anything else, the result of the EU Referendum has highlighted the need for finance departments to have powerful, agile planning systems that are able to rapidly re-model forecasts and plans, and allow for many potential scenarios to be run.”

Essentially, insurers need to employ the same risk management strategies they apply to their client portfolios, but in a potentially larger and exceptional context.

Solvency II
The UK insurance market is governed by EU legislation. Alongside the potential impact on international trade, this is one of the reasons why Article 50 could have such a bearing on insurers across the country.

Introduced almost two years ago in January 2015, Solvency II requires insurers in the EU to ensure that they have enough capital to cope with large business losses, and is in part a legacy from the Lehman collapse, or more specifically a desire to avoid a similar catastrophe in the insurance market.

However this legislation has garnered little support from insurance firms, with only 17% believing it’s been worthwhile. It has been criticised for making long term investing more difficult, and so by leaving the EU regulations could be adapted to better suit an independent UK market.

Foreign Trade
Insurers have also been keen to prepare for global trade expansion should the UK leave the EU, and have asked for MPs help to break into foreign markets. India and China are a priority, as between them the countries make up 60% of the UK’s service exports.

ABI Director General Huw Evans wanted to see the UK insurance market set an example of free trade for other countries to follow,

“With protectionist forces growing in strength across the world, the insurance industry can become a leading example of how free trade can benefit everyone […] The UK is seen as a world leader, and can help many emerging and developed countries which exhibit significant under-insurance.”

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