More industry feedback will be added later today, here are some initial thoughts on the Labour victory;
IE COMMENT;
So far it’s looking like a Labour landslide, as they secure an estimated 35% of the votes cast yesterday, plus postal votes. Change is coming says Labour, but given the problems across the public sector, plus the lack of investment in big infrastructure like power generation, roads, housing, clean rivers, reservoirs etc it’s difficult to see how any ambitious plan can be enacted within a 5 year Parliament. There’s always an IMF loan of course…
Infrastructure breakdown is being accelerated by mass migration, which many in business see as a good thing. Importing one million people a year into the economy can spur growth, if they are skilled workers. But a large proportion of the young men arriving in the UK are not skilled, many don’t speak english very well and hide their true identities. That also creates an ever increasing challenge for insurers, since those who live on the margins of the hidden economy (nail bars, takeaway delivery, car washes etc) generally don’t take out insurance on vehicles, healthcare or assets. Verifying customer ID is going to be one of the growth sectors in insurtech in the next 5-10 years.
As regards economic growth the challenge is empowering start-ups with low CT, dividends of 10K a year tax free and lower employer NI for companies with a sub 10 employee/250K turnover. But that doesn’t sit well with socialists of course. It’s not something the Conservatives bothered to do since 2010 either, in fact they punished those who run small businesses. Hard to see thast mindset changing under Labour, so insurance brands can expect more regulation, more taxation and more MPs speaking out against any decent profit margins being made. In many ways it will be a hostile environment for business and wealthy individuals – expect an exodus once an emergency budget is passed. And it will come, Labour will run out of cash very quickly, about 18 months from now.
Interesting times ahead. Here are some thoughts from Martyn Mathews, MD at SSP Broker, after the initial GE results;
“Labour’s promise to close tax loopholes, could have an impact on investment decisions within the insurance sector. However, by maintaining tax stability they are also offering a predictable environment for insurers to plan their operations and product offerings. Stability is key for the broker market we support so we look forward to seeing how this develops.
“With regard to rising premiums, after accusing the Conservative government of sitting back and allowing car insurance costs to spiral, it will be interesting to see how Labour plans to tackle rising costs. Insurance providers are absorbing growing costs with the average motor insurance claim rising 8% to £4,800. I doubt that fixing one million potholes across England will make a sizeable enough dent in claims costs. But it’s a start.
“To promise consumers cheaper insurance without having a detailed understanding of the issues faced by insurance providers may have been unwise. The costs faced by insurers are manifold – there is no magic wand to deal with the cost of repair, replacement vehicles, theft and fraud. It’s a multilayered problem that needs a multilayered solution as set out by the ABI.
“Tackling some of the thornier issues in the general insurance ecosystem has been a challenge for sequential governments in the digital age. It would be encouraging if the new government could compel the relevant regulatory bodies to focus on divisive points such as the credit hire temporary vehicle market, hidden-to-consumer acquisition costs, software monopolies in certain product lines, brand stacking and industry-wide unwillingness to share quote manipulation and gamification data. All of which will have a material effect on the price the consumer pays.
“Labour has also emphasised its plans to use Consumer Duty to enhance the international competitiveness of the UK’s financial services sector. The party aims to streamline the regulatory rule book in line with Consumer Duty, which, it argues, will strengthen international engagement in financial services and develop a more collaborative relationship with the EU.
“As experts in consumer choice, we know brokers have invested heavily in embracing Consumer Duty, rebuilding their operations to provide better outcomes for their customers. And for those organisations, there should be little to worry about with the new government.
“But any firm attempting to delay or ignore Consumer Duty expectations may put their organisation at huge risk as we expect to see the guidance, along with ESG, play a strong role in the new Labour government.”
BROWNE JACOBSON
Gerard Hanratty, Head of Health and Life Sciences at UK and Ireland law firm Browne Jacobson, said: “With lots on its plate to make positive change in the NHS, the new Government’s healthcare strategy should combine short, medium and long-term priorities that begins to gradually move us from a curative to preventative system.
“Reforms to dentistry, mental health and smoking are immediate areas that will help proactively address key health and service issues
“A more challenging task will be to clear NHS waiting lists within five years, so the Government must find a way of making it easier for the private sector to partner with trusts and plug the gap in delivering vital services. Identifying the right legal framework for provider collaboration can bring better services, cost efficiencies and transparency for patients.
“At the same time, we must continue to embrace the role of technology and data in the modern healthcare system while safeguarding patients.
“Along with further developing the NHS app to enable patients to manage their medicines, appointments and health needs, a clear AI regulation strategy is required.
“This should be developed to enable cross-border, data-driven healthcare as far as possible. By striking a delicate balance between promoting innovation and ensuring accountability through ethical guidelines and standards for AI development and deployment, we can create a more efficient and preventative-focused healthcare system.”
STARPEAK INSURANCE
Julian Hucks, Founder and Managing Director, Starpeak Insurance Solutions, added this;
“Labour’s General Election victory should be a step in the right direction when it comes to tackling the ongoing issue of underinsurance for small businesses. SMEs have had a tough few years navigating the cost-of-living crisis and other economic challenges, which has ultimately led to costs being cut. Unfortunately, insurance cover is among the casualties. Labour’s promise to stamp out late payment of invoices to small businesses should result in better cash flow – meaning more businesses will be able to pay for insurance cover on time and protect themselves against potential risk.
The pledge to address skills shortages is also great news for the insurance industry. Our field has been grappling with an aging workforce and struggling to attract new, ambitious talent. The introduction of new Technical Excellence Colleges will hopefully entice more young people into insurance by demonstrating the range of new roles that technology has created across the sector.”
ACSO
Commenting on the results from the 2024 general election, Matthew Maxwell Scott, Executive Director of the Association of Consumer Support Organisations (ACSO), said:
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