I thought it was about time we had a ‘glass half full’ perspective on Brexit, as too many Insurers are focussing on downsides at the expense of the opportunities. Remember that some insurers were worried about the changes from digital insurance and those that ignored or failed to capitalise on this change have gone from being ‘wannabes to has beens’. After all, London is the World leader in Insurance FinTech and has proven credentials for innovating and transforming, so who better to shape successful solutions to Brexit than the UK.
Wherever Brexit ends up, it will be a big challenge for UK Insurers, like distributed ledger or big data, as it threatens our ability to conduct business across the EU. Insurers have been international since the Babylonian bottomry contracts so the current impasse that threatens restricting passporting rights for insurers across the EU is serious. This works both ways and EU countries are also worried about their potential loss of access rights. As we move into 2019, the current stalemate pits Theresa May’s desire for financial stability, protection for UK investor and citizen rights protection against the EU’s desire to maintain its internal market, protect its citizens’ rights and companies. There is much political shouting, and so business is starting to become nervous because of the uncertainty.
The pros and cons of Brexit are now irrelevant as the fall-out from this political collision is the uncertainty that it brings. Insurers are still writing business past March 2019 on the assumption that these policies will still have force across the EU. This is a big assumption. Brexit has many risks including compliance, currency exposure, disparate regulations, cost increases, reduced access to insurance capacity, loss of EU employees and a reduced ability to manage EU clients. Who knows where it will end.
However, the challenges to existing business models, such as P2P and Usage-based Insurance, are opportunities to steal a march on the competition with better costed and targeted solutions. So what are most IT insurance leaders doing? They have either assumed there will be a Norway-style agreement being in the European Economic Area or the Swiss-style Solvency II compatibility model. The ‘glass half empty’ ones are then pursuing risk mitigation strategies such as setting up EU subsidiaries or the BIBA recommended ‘wait and see’ approach hoping for a long transition period. They are being too cautious and the ‘glass half full’ ones are promoting UK-specific regulations such as gender-specific policies, developing new products and targeting expansion in the growing Far East markets such as China. They see the opportunities in Brexit and are ensuring they have the technical tools, such as CGI’s Insurance Market Manager, Cloud Enablement and Compliance Competence to benefit from this disruption. Let me know which insurers and re-insurers you think are wannabes and which are has-beens?
About this author
Adam is an ex-CIO and Director in CGI’s Insurance and Financial Services’ Business who is managing some of CGI’s biggest Insurance accounts. He has over 20 years’ experience at CxO level with blue chip customers in the UK, Europe and North America helping deliver profitable ...