Economic confidence across the insurance profession has fallen to its lowest level since 2011 with nearly half of those in insurance expecting the economy to worsen this year, according to new research.
A study by the Chartered Insurance Institute (CII), the insurance and financial services trade body representing over 120,000 members, found that 92% of those in the Lloyd’s market say securing EU passporting rights should be a top priority in Brexit negotiations. This echoes HSBC chairman, Douglas Flint, who recently said that failure to secure passporting rights would result in the bank shifting thousands of staff and offices out of London.
The CII calls on prime minister Theresa May to make an early commitment to transition arrangements post-Brexit. The demand follows a similar request by TheCityUK on 12 January, but on 16 January, May said she would rather a hard Brexit than a poor deal for the UK.
The CII study showed a significant fall in confidence among members, reflecting general pessimism about the economy and business prospects. Only 23% of members expect the economy to improve over the next year, a significant reduction from the 67% who were confident in the economic outlook in 2015’s survey.
Employment prospects are also lower than in 2015. Just under half of respondents said their employment prospects are the same today as a year ago, with only 29% reporting an improvement.
Most members surveyed voted to remain in the EU and 45% are not confident that sector’s interests will be well represented in the exit negotiations.
But the majority of members haven’t changed their investment decisions despite imminent EU exit negotiations. In total, 68% of members said Brexit would make no difference to their firms’ appeal to recruit necessary skills.
CII members in London are the most pessimistic, while members in the North East of England are the most optimistic about the domestic economy over the next year.
Members in “financial advice” and “life, pensions and long-term savings” attach the least priority to passporting rights and access to the single market relative to other sub-sectors.
Keith Richards, CII managing director of engagement, said: “The insurance profession cannot adopt a ‘wait and see’ approach to the UK’s future relationship with the EU indefinitely. Publishing specific proposals regarding what form transitional arrangements should take before beginning negotiations, and to make obtaining them an early and important objective once negotiations have commenced, would discourage businesses from pre-emptively making changes based on a ‘worst-case’ scenario. We have major concerns over what the impact of this uncertainty could mean for the consumer and urge the government to make an early commitment to a transition arrangement.”