The UK needs to secure a new relationship with the EU and it needs to achieve clarity on this quickly. Respondents noted a trend of politicians ‘kicking the can down the road’ and waiting until the eleventh hour to reach political agreements. Such ‘eleventh hour’ agreements may be sufficient for averting constitutional crises, however, legal certainty requires more planning: businesses cannot plan based on political agreements reached late in the day.
As the trade negotiations between the UK and EU unfold, Kennedys is here to keep you up to date on the latest Brexit developments and what they mean for you and your business.
- 31 Jan 2020 UK leaves the EU
- 31 Dec 2020 Transition period ends
The UK ceased to be a member of the EU at 11pm on 31 January 2020, representing a defining moment in the UK’s history. The transition period is due to last until 31 December 2020, during which time the UK will be able to sign new trade agreements with other non-EU countries and begin formally negotiating a future trade deal with the EU. Those trade talks are taking place against the background of major changes in the UK’s political landscape. Kennedys is committed to staying abreast of the political negotiations and keeping you informed about the expected outcomes. We are here to help you understand the business impacts - whether you are a UK SME or a major global insurer.
Kennedys is a leading voice on Brexit, particularly for the insurance industry. We have commissioned two market reports to understand what Brexit means for the industry - one before the UK referendum, and one after. Our latest report - Brexit and the insurance sector: Towards 2020 and beyond - takes views from 20 leading insurance industry experts and policymakers and offers a six point plan on how to safeguard the long-term interests of businesses. These six key recommendations, if implemented, will safeguard future investment, talent and innovation in the insurance sector.
The UK formally notified the European Council of its decision to withdraw from the EU on 29 March 2017. This triggered a two-year timeframe to negotiate a withdrawal agreement. Our timeline illustrates what has happened to date and what we expect to happen going forward.
Our report clearly highlights that Brexit represents a source of uncertainty to one of the UK’s most important economic sectors. In the absence of clarity, firms have already developed contingency plans, largely based on the working assumption that no deal on market access will be struck.
The UK is now of course at the start of those future trade talks. Whatever the outcome, business must adapt to the shift in the political picture in the UK since the 2019 General Election. The main message is clear: business is expected to identify and promote the opportunities that Brexit can bring to the UK.
Deborah Newberry, Head of Corporate and Public Affairs
Our key recommendations
1. Resolve the uncertainty surrounding the terms of the UK’s exit
2. The UK should aim for flexibility around the exit
The timescale for leaving the EU should be flexible and pragmatic. The UK should not commit to a hard deadline of December 2020 if more time is required to agree a bilateral relationship. Some even felt that the UK should ask for more time to conclude the initial discussions, effectively extending the Article 50 process beyond March 2019.
3. Defining ‘best third country’ status – the new trading relationship
The UK Government has consistently talked about securing a ‘deep and special’ trading relationship with the EU post-Brexit. The industry’s preferred option for securing such a relationship is a bespoke Free Trade Agreement which enshrines mutual recognition of each party’s domestic rules. Mutual recognition must also enshrine the need for broad regulatory alignment between the EU and UK overseen by an independent dispute resolution mechanism. The UK Government’s White Paper – which reflects the Prime Minister’s ‘Chequers Agreement’ – appears to support this outcome for goods but, crucially, not for services such as insurance.
4. The UK should not become a rule-taker
Market practitioners support the views of UK policymakers in rejecting the view that the UK should become a rule-taker, an outcome closely associated with the Norwegian model based on EEA membership. The UK should instead seek to combine regulatory alignment with the EU Single Market wherever possible whilst allowing the UK authorities to develop rules which are appropriate to the scale, nature and size of the UK market.
5. Protecting workers’ rights
There should be a clear statement on protecting the legal rights of EU migrant workers already in the UK, as well as those who may come to the UK during the transition period in the lead up to December 2020. Many thousands of EU migrant workers are currently employed in the UK insurance sector. It is estimated that there are at least 2,000 working in the London Market, and potentially thousands more working across the UK sector.
6. Protecting investment in research and development
The UK Government must commit to maintaining funding streams for EU-backed research and innovation into areas which promote innovation in insurance including artificial intelligence (AI), autonomous vehicles, health and life sciences.
The UK’s insurance sector manages investments of £1.9 trillion (25% of the UK’s net worth), employs around 330,000 people and exports over £21 billion of services across the EU Single Market every year. Getting the best deal possible post-Brexit will have a profound effect on maintaining this global success story.
Brexit and the insurance sector: Towards 2020 and beyond
Brexit and the insurance sector: Towards 2020 and beyond
Our latest report explores the subtle nuances involved in making Brexit a reality. It provides a comprehensive and objective review of the threats and opportunities when viewed from the prism of one of the UK’s most important economic sectors. Read about our six point plan, why the single market matters to insurers, future trade relationships options, the impact on insurers so far and how we can protect the sector.Read more