In this article taken from issue two of our magazine, In Touch with Business, we explore whether it's possible to insure against Brexit.
With Brexit uncertainty growing by the day is it time your business looked at insuring against any potential impact?
It has become the great unknown. What Britain’s business landscape will look like post-Brexit – and the impact of the divorce from the EU - continues to be of pressing concern to businesses across all sectors.
The great uncertainty of it all has had growing numbers of businesses reaching out to their insurance policy providers to see if there is a way to insure against any potential impact.
And therein lays the problem, says insurance industry stalwart Nigel Allen. He says: “The potential impact is incredibly difficult to define, by business owners and insurers alike, but of course it has to be in order to develop the policy that’s both meaningful and offers the protection needed.”
He cites the import and export business as an example of the challenge. “Trade tariffs will likely change and no doubt cause impact if they do. So will a whole heap of red tape issues,” he says.
“How and when that will hit an importer and or exporter is harder to define but it will have an impact.That is not to say that businesses can’t insure against any Brexit impact,” he adds.
Allen says: “Several providers now offer that, so they have found a working way around the uncertainty via a highly specific policy cover approach.
“That alone is an example in itself of the impact of Brexit given the cost of the policy; which wasn’t a financial concern to any business owner just a few years ago.”
Allen adds: “It’s an interesting and emerging area for the insurance sector.”
In the construction industry experts have been offering firms bespoke Brexit insurance consultations since last summer. The aim has been to advise firms how best to protect themselves from the uncertainty. At the heart of construction’s fears are a negative impact of Brexit on the industry’s pool of EU workers and the financial implications that could have.
Speaking last year Mark Herbert, of Construction Insure, told the trade press: “We understand this is a major worry for thousands of UK construction firms.
“And as the Brexit negotiations have dragged on without much apparent progress we have witnessed a steady increase in enquiries from builders and contractors eager to ensure they are adequately insured for any downturn in their business once Britain leaves the European Union.”
Another major insurance firm announced at the end of last year that its management liability product, which covers the costs of defending a business and its senior managers against legal and regulatory actions, would include added protection against Brexit claims.
There are other unknowns when it comes to insurance. Allen says: “Pretty much all insurance is underpinned by EU directives, so will they now be under Brexit?
“Will they be EU or UK directives and if so what will they look like, what will their scope be? The answer is no one knows.”
Amid all the uncertainty Allen says businesses shouldn’t be put off exploring if Brexit Insurance is right for their operation.
“The uniqueness of each business in each sector complicates answering the question,” he adds.
“As company directors with your own specialist and unique knowledge of your business, only you know if it’s time for Brexit Insurance.”