In a result that has sent shockwaves throughout the insurance industry worldwide, the UK has officially voted to leave the European Union.
The outcome has been watched globally with many predicting that the decision to leave will have a huge impact on the financial markets and the insurance industry in particular. The UK Treasury, the International Monetary Fund and others all warned that a vote to leave would damage the UK economy as well as threatening global markets; while both the Association of British Insurers (ABI) and the British Insurance Brokers Association (BIBA) were outspoken in their support of a remain vote. Meanwhile, managing director of British multi-national insurer Aviva went on record with Insurance Business UK
stating that: “Our corporate view is that we should remain.”
It’s not just the insurance industry in the UK that is likely to be affected either. In the lead-up to the vote, insurance association leaders from across Europe – including in Germany, Ireland, Italy and the Netherlands – all had their say, pleading with insurers across the UK to vote to stay “in” and issuing a collective statement which read: “While the Referendum is clearly a matter for the British public to decide, there will be implications for all EU markets. We believe it is in everyone’s interest – the UK and the EU – for the UK to remain. And we will be watching and hoping that the result means that the constructive relationship will continue with the UK playing a full role as a full EU member.”
Ultimately however, their efforts have proven to be to no avail.
Some insurers have already taken steps in anticipation of today’s outcome. New Zealand’s CBL Insurance, which operates European Insurance Services from Tunbridge Wells in the UK, will continue operations in the UK but will change its legal domicile with managing director Peter Harris stating: “We have already confirmed to our employees at European Insurance Services Ltd (EISL) in Tunbridge Wells UK, who write business in France, that… EISL will remain operating in Tunbridge Wells, and shift its legal domicile, probably to Ireland.”
Meanwhile, Pierre Vaquier, Axa Investments Managers-Real Assets CEO, has stated that the company will “revisit its options” following the EU withdrawal with the company having previously planned to build London’s tallest skyscraper.
The referendum vote came at the conclusion of what was a divisive campaign. On one side of the contest was British Prime Minister David Cameron ushering stark warnings about the financial and economic risks of a departure; while the ‘leave’ campaign was headed up by former London Mayor Boris Johnson who used immigration as a key ploy in whipping up support suggesting that an exit would allow Britain to regain control of its borders.
Now questions are swirling as to the future of the British Prime Minister – he had publicly vowed to stay on regardless of the result, but many have questioned whether his position will remain tenable after such a significant defeat.
The vote has widely been considered a shock result with Paddy Power, Ireland’s largest bookmaker having placed the odds on a ‘remain’ vote at a 1/12 chance – effectively a 92 per cent probability. This represented a swing from 77 per cent just one day earlier, making the result all the more surprising.