Jon Dye on optimism and the importance of insurance to society
Posted on: 07 March 2018
There is clearly considerable economic and political uncertainty right now, primarily caused by Brexit. But it is precisely this atmosphere that provides the industry with a great opportunity not only to build on the sizeable contribution it makes to the UK economy, but also to support the millions of consumers and businesses covered by insurance allowing them to continue making their contribution too.
The insurance industry is a vital contributor to Her Majesty’s Treasury. The most recent figures from the Association of British Insurers showed the sector made a £35bn contribution to the UK economy and paid £11.8bn in taxes in 2014. These are big numbers which everyone in the insurance industry should be proud of. Importantly, the government and regulators recognise this contribution too so it should be a priority for them to create an environment which allows the industry to deliver consistent profitable growth. This recognition should also be helpful when insurers are lobbying for change that enables them to prosper.
Uncertainty around Brexit and the UK’s physical and digital infrastructure is dampening spirits in the insurance sector according to the latest CBI/PwC Financial Services Survey. But there’s more confidence within the industry than the headlines might suggest. Importantly, the survey also reports that insurance brokers are also investing heavily in training and ways to increase efficiencies, provide new services and reach new customers. These are all actions which suggest to me that brokers are taking positive steps to ensure a sustainable and successful future and not letting uncertainty stand in their way.
Looking at the facts shows us how important we are for our customers. In 2016 insurers paid out £33.3m per day in motor vehicle claims, split £23.6m in personal and £9.7m in commercial. In private motor, 98.4% of claims were accepted. In property, £12.9m was paid out each day of which £4.7m was for domestic claims and £5.5m related to commercial claims. Transferring financial risk and the peace of mind that brings are precisely what people value when the macro-economic signs are less than positive.
But it’s not just paying claims that insurers bring to the table. When organisations see tough times ahead, some retrench but others look to innovate and expand to get ahead of the competition. Insurance is often a vital component in supporting new projects and innovative ideas get off the ground which would otherwise be seen by lenders as too big a risk to take. Many SMEs looking to expand their businesses only do so once they have confidence that the proper insurance is in place, having talked the plans through with their insurance broker.
And if it's long-term confidence you are looking for you need look no further than our parent company’s decision to invest £713m into the joint venture with LV=. It’s a clear sign that the UK insurance industry is expected to do well over the coming years, regardless of the impact of Brexit.
This opinion article was originally published on Insurance Age's website. It may not be replicated in any other publications.