In the summer of 2016, the United Kingdom voted to leave the European Union. The announcement sent shockwaves through the international community. Now, almost two years later, it appears that Brexit has had an impact on several industries and businesses. What many people didn’t understand was that a series of subtle changes may occur in the economy, both good and bad.
In terms of insurance, Brexit will have a considerable impact. Insurance companies will have to decide how to approach a UK outside of the EU, as well as how to conduct business across European borders. As most major insurance companies are international, the majority of insurance providers will be looking to prepare their firms for the future.
In this article, we’ll take a look at what Brexit might mean for the insurance industry and how it may impact you as a policy holder.
EU Laws and Insurance
The EU has several laws that insurance companies have to abide by in order to provide insurance to people in the region. For example, insurance companies are not allowed to change their prices based on the gender of the policy holder. In addition, there are several higher-level laws the insurance companies must abide by – the EU provides oversight on their dealings and can punish agencies for not abiding by guidelines.
Less Protection, More Competition
While the removal of these EU laws might seem bad at face-value, there may also be some serious benefits. Insurance companies may see different ways to become more competitive in the market – companies are probably already figuring out different avenues for becoming more attractive in an independent Britain.
On the other hand, it may also mean there is less consumer protection, which could put you at risk. For this reason, it’s important to make sure you keep up to date with what changes occur once Brexit is complete.
Another issue is administrative costs – this may result in an increase in insurance prices in the UK. For example, if businesses have to move their European headquarters to other cities in Europe, and are less able to transact business across borders, this may have an impact on the cost of your premium. At the end of the day, insurance companies pass costs onto consumers.
As Brexit is yet to come to full fruition, it’s hard to say whether or not it will have a serious impact on the price of your auto insurance. In fact, it’s likely that we will not know the true impact until years after the final Brexit deal is reached. It won’t be until then that insurance companies can begin to test the waters with a full-scope of their risks. The UK government may even impose their own new rules and regulations on the industry.
Regardless, insurance prices have increased in the past few years, primarily due to large catastrophes abroad. If you want to know more about how the international insurance industry impacts the British insurance industry, have a look at some of our other blog posts!