Confidence in the global and local economy has “plummeted” to its lowest level in five years among insurance industry professionals, the Chartered Insurance Institute revealed today, citing new research.
In the UK in particular, “the optimism in the UK economy that had been building in recent years has fallen off a ‘cliff edge'”, resulting in “the greatest one-year fall” in confidence since the CII first began to develop its economic, business and employment prospects indices in 2011.
In releasing the findings of its research, the organisation, which represents more than 125,000 insurance and financial planning industry professionals in more than 150 countries, called on UK prime minister Theresa May to “make an early commitment to transitional arrangements following the UK’s departure from the EU”.
The research was compiled by CII researchers working in partnership with the Centre for Economic and Business Research (CEBR), from responses submitted by 3,711 CII members and received between 4 – 21 November last year.
The CII released its findings on Tuesday, hours before the UK prime minister was due to give a long-awaited speech on Brexit, in which she said there was no way the UK could remain in the European single market, and reiterated her intentions of invoking Article 50 of the Lisbon Treaty by the end of March, formally starting the clock on Britain’s withdrawal. This would mean Britain would officially leave the EU no later than April 2019.
Other key findings in the the CII’s 25-page Economic Outlook and Brexit Survey, which may be viewed on the CII’s website:
- Nearly half (48%) of those working in insurance expect the economy to deteriorate in 2017, “nearly ten times higher than a year ago (5%)”
- 92% of those in the Lloyd’s market believe securing EU passporting rights should be a top priority in Brexit negotiations
- 47% of Lloyds/London Market members believe their own firm has a contingency plan for leaving the EU, the highest share of all sub-sectors. Members in general insurance were the least likely to say they think their company has such a plan (26%).
Within the insurance profession, those working in the Lloyd’s market were found to be the “least optimistic” about the year ahead. More than a third of these Lloyd’s market professionals, or 37%, expect the economic situation to worsen, and only a fifth of them, or 20%, think it will improve in 2017, compared with 20% and 33% respectively among general insurance industry respondents.
The research also revealed that those working in the London market were the “least likely to have voted to leave the EU” and most likely to value the benefits of the single market.
“In fact, the vast majority (92%) believe that passporting rights should be a top priority in the Brexit negotiations for a smooth transition,” a summary of the findings noted.
And, while there may have been measurable differences in opinion between various sub-sectors of the insurance profession, “there is widespread unease about what will happen to the British economy following Brexit”, the results showed, with “nearly half, or 45%”, of the CII’s membership saying that they were concerned that the insurance and financial planning sector would “not be well represented in negotiations, which will have a detrimental impact on both the profession and its customers”.
In a statement accompanying the CII report’s findings, CII managing director of engagement Keith Richards said the organisation called on Theresa May, pictured left, “to make an early commitment to a transition arrangement, to bridge the transfer from the UK’s membership of the EU to its new trading relationship outside of the bloc.
“This commitment and clarity will help alleviate [the economic uncertainty flagged up by the CII’s reserach], and provide the conditions for as much business continuity as possible for the sector.”
He added that the insurance profession could not simply 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,” he went on.
“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.”