As a group, brokers generally tend to stick together when it comes to regulations or political issues, such as the new regulations that the FCA are planning on implementing within the industry in the near future. However, the EU Referendum is a completely different story, and it seems as though even brokers haven’t escaped the split in opinion that has spread across Britain.
When it was first announced that the EU Referendum would be held on the 23rd June this year, Lord David Hunt, chairman of the British Insurance Brokers’ Association (Biba) claimed that an “overwhelming majority” of brokers he had spoken to wanted to stay within the EU. Furthermore, he stated that if Britain left the European Union we would be “jumping into the abyss” as we would no longer have a single market.
“Staying in – we get the best of both worlds,” said Lord Hunt. “We will be in those parts of Europe that work for us but we’ll be out of the parts of Europe that don’t work for us. There is a clear understanding that we will never join the Euro and there had been a number of concerns that this might impede progress towards the single market in financial services.
“There is general welcome for the fact that the settlement makes it clear that we now have this special status. We cannot be forced into measures within the Eurozone which might restrict our ability to take advantage of the free trade single market of 500 million people.”
However, just a few weeks after Lord Hunt’s statement it was revealed that brokers’ opinions are actually split when it comes to the EU Referendum, mainly due to the fact that smaller brokers are not sure that they are feeling the benefits. Unsurprisingly, it’s the larger brokers and insurance companies that have been the most supportive of the European Union, as they have the finances and resource to branch out into other countries.
Smaller brokers on the other hand are less likely to branch out into other countries, which they argue could lead to large brokers getting larger and smaller brokers being pushed out the market. The fact that George Osborne announced in his recent budget that Insurance Premium Tax (IPT) was yet again to rise from 9.5% to 10% also means that things are going to become even tougher for smaller brokers who may not be able to absorb the cost as larger insurers or brokers could decide to do.
Smaller motorhome insurance brokers may find it unfair that the tax increases are applied across the board, with the size of companies and the products they offer rarely being considered. This is especially true when you consider the fact that last November Insurance Premium Tax increased from 6% to 9.5%, meaning by November customers will have to pay an extra 4% in IPT on their insurance policies.
Sweeping regulations across the board seem to be a real sore point for small brokers, regardless of whether it comes from British and European regulatory bodies. In general, most brokers concede that the EU does offer numerous trade opportunities, however in the real world it’s difficult for smaller brokers to take advantage of these opportunities which places them on the back foot.
It’s difficult for brokers to determine whether Britain would be best off in or out of the EU as even though it offers trade opportunities, at the same time their regulations do not consider the complexities or diversity of the British insurance industry. On the other hand, brokers will want to do nearly anything they can to prevent Britain going into economic turmoil, which is why some may be convinced to remain within the EU even if they don’t receive any tangible benefits.
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