With the impending decision for Brexit, UK insurers are shedding light on the economic effects of no-deal Brexit, The Guardian reports. The UK departing from the European Union (EU) without reaching a withdrawal agreement would be an ‘unforgivable act of economic and social self-harm.’ This is partly because the 21-month transition will not be implemented and stakeholders (including businesses, consumers, public entities) will have no leeway for adjustments and will have to take immediate action.
In a speech by Huw Evans of the Association of British Insurers (ABI), the organisation announced that it foresees a significant trading block which will be governed only by the rules of the World Trade Organization (WTO). The issue is that the EU’s top trading partners do not make trades with the EU only on WTO rules. Evans states that this will be ‘inadequate and unprecedented.’
How No-Deal Brexit Would Affect Insurance
The ABI states that this abrupt transition would endanger a huge number of car and travel coverages. This means that Britain citizens who intend to drive in mainland Europe and Ireland should have an insurance green card, as their insurance policies would not apply without it. Motorists can request for a green card from their provider to prove that they have motor policy coverage.
In preparation for this scenario, insurance companies are formulating contingency strategies that involve transferring 29 million worth of contracts and setting up subsidiaries and branches in the EU.
Meanwhile, insurers might need to have significantly more capital to accommodate the needs of their clients.