The UK insurance industry is the largest in Europe and the implications of withdrawal from the EU (European Union) will have some severe repercussions.
One of the greatest impacts will be the ability to continue open trade with other EU nations. Currently, UK insurance companies are free to do business with EU member states without any restrictions or limitations. If the Brexit decision goes ahead, these terms will need to be renegotiated and would probably result in a restriction or denial of free trade with EU member states.
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Regulatory challenges and capital requirements will come into effect which will create obstacles to future business in the insurance industry. This, in turn, will result in additional costs for insurance companies to continue business in EU states.
The Brexit vote is also likely to have an impact on employment in the auto insurance industry. EU employees are likely to lose their jobs while UK employees may need to suffer salary cuts as more employees are sourced from the UK. The skill level of employees in the insurance industry may drop as a result.
In the long run, a withdrawal form the EU may affect the insurance industry on a much deeper level. As the largest insurance provider in Europe, the UK has meaningful involvement in the structuring of legislation and regulations governing insurance across EU states. In the future, their influence will be severely restricted or even entirely excluded meaning that regulatory decisions may not be to the benefit of the UK insurance industry.
On a larger scale, the withdrawal may also impact other international business. The UK auto insurance industry is seen as the gateway for EU trade for countries like China and the United States. This will affect investment into the UK insurance sector as well as the ability to do business and remain competitive on a global scale.
On the upside, analysts predict that the insurance industry in the UK is still likely to stay active. However, this will be dependent on the steps that are taken to meet the challenges and obstacles that are likely to come into play once full withdrawal from the EU becomes a reality.
In fact, the resilience of the London and UK markets may attract more business to the insurance industry as the sector will no longer be restricted by current EU statutes, regulations, and legislation. The impact of the Brexit Vote will be primarily noticeable over the medium term but should stabilize with regards to the insurance industry in the long run.