If there’s one industry which knows about hedging its bets, it’s insurance. No sooner had the ink dried on the 2016 Brexit referendum than many firms set about restructuring their businesses and securing new talent pipelines.
While the Association of British Insurers (ABI) believes some 35 subsidiaries and 29 million contracts were transferred to the Continent in the two years that followed the vote, for other players it was a case of looking closer to home.
“Our focus is on our strongest and most strategically advantaged businesses in the UK, Ireland and Canada,” says Suresh Weerasinghe, head of European Union and Brexit public policy at Aviva.
“These are our core markets, where we have market-leading positions, can generate attractive returns and have a clear path to win, and we will invest for growth across them.”
He believes Brexit offers a good opportunity to regulate specifically for the UK market, rather than for the EU as a whole, and says the new rules should be tailored with this in mind.
With an already-strong international presence, the task for Willis Towers Watson was to create a dual-regulated operation in Belgium, allowing collaboration between client services teams in the EU and UK.
“So far the trading climate has been maintained at very strong levels thanks to the planning and solutions we put in place,” says Nicolas Aubert, head of Great Britain at Willis Towers Watson, who is looking forward to a new period of innovation and growth.
Post-Brexit, the firm’s experience has been “one of continuity, for our clients, ourselves and our business partners, so there have not been too many bumps in the road so far”, he says.
While regulatory change is uppermost in firms’ minds, a clearer glimpse of the road ahead has become more important than whether the new rules will be tougher or perhaps increasingly light touch.
Clarity first for insurers
As a highly regulated business, reliant on what Aubert calls “having good readability” from the regulator, clarity has now become the top priority, he says, allowing firms to “see what the regulatory environment will be like as far into the future as possible and to adapt, prepare and maintain the quality of business operations and client experience”.
While consolidation among large insurance houses, including Aon’s proposed merger with Willis Towers Watson, continues throughout much of the sector, the independent broking industry has proved equally acquisitive.
What started out as a Brexit hedge has become a successful and long-term growth strategy for us
“There’s an arms race in the UK insurance broker business and despite the overall number of firms in the country dwindling to just 2,000, there’s no sign that this trend will end soon,” says Peter Blanc, group chief executive at Aston Lark.
Having geared up for Brexit by purchasing two brokerages in Ireland, both with London branch status, his own firm has well-advanced plans for further growth.
“Having made a decision to significantly expand our Irish business, we have invested in leadership and are now engaged in the diligence process around acquiring further brokers in the Irish market,” he says. “What started out as a Brexit hedge has become a successful and long-term growth strategy for us.”
With a recent KPMG report, commissioned by the ABI, suggesting that reforms of financial regulations could release £95 billion to help boost the UK economy and tackle climate change, modelling work around the management, reduction or transferring of large client firms’ climate risk is inevitably gathering pace.
Aviva pledges net zero carbon
As part of a growth plan, Aviva has announced its intention to become a net-zero carbon emissions company by 2040, a move described by Weerasinghe as “the most demanding target of any major insurance company in the world today”.
“The undertaking, which will inform every aspect of operations and investment decisions, is part of our strategy to be the UK’s leading insurer, contributing to a sustainable economic recovery,” he says. “We have big ambitions for Aviva.”
For Willis Towers Watson, which names improvements in diversity and inclusion as a top priority for the business internally, staying ahead of the game over new attitudes to employment is also vital.
“The future of work is also an area that we put a lot of time and effort into,” says Aubert, noting the “remarkable resilience and flexibility” shown by the firm’s workforce during lockdown.
“This has been an important issue for many years, but particularly now as we reimagine the workplace of the future,” he says.
While ABI assistant director Carol Hall, head of European and international affairs, shares Weerasinghe’s view that autonomy over regulation could augur well for UK firms and consumers in the long term, she sees 2021 as primarily a bedding-in year for Brexit.
We are outside the club now and market access will not be the same, but things should settle down in time
Continuing the flow of personal data between the EU and UK for six months was helpful, she says, and with a decision on the UK’s “data adequacy” likely to happen within that time, cross-border claims are continuing to move without hold-ups.
As for the long-term prognosis, Hall is cautiously optimistic. “We are outside the club now and market access will not be the same, but things should settle down in time and it’s clear our sector has not been as badly affected by Brexit as many other industries have.”
Aston Lark’s Blanc reads the situation differently. “My long-term prediction is that everyone will realise all the passporting and free movement arrangements were put in place because they made everyone’s lives easier, and over time we’ll end up reinstating these types of arrangements under different names and banners,” he says.
“Bit by bit, new agreements will be reached to streamline processes and enable clients to be looked after, and eventually we’ll get back to a suboptimal version of what we had in place pre-Brexit.”
If there’s one industry which knows about hedging its bets, it’s insurance. No sooner had the ink dried on the 2016 Brexit referendum than many firms set about restructuring their businesses and securing new talent pipelines.
While the Association of British Insurers (ABI) believes some 35 subsidiaries and 29 million contracts were transferred to the Continent in the two years that followed the vote, for other players it was a case of looking closer to home.
“Our focus is on our strongest and most strategically advantaged businesses in the UK, Ireland and Canada,” says Suresh Weerasinghe, head of European Union and Brexit public policy at Aviva.
