We’re now just a month away from March 29 – but we are still no closer to knowing exactly what will happen on the day Brexit is supposed to take effect.
Our politicians have so far failed to find a deal that everyone will buy into, and it feels like a new spanner is thrown into the works almost every day.
So life has to go on under a cloud of uncertainty that is having a huge impact on all areas of business and industry – insurance and the motor trade being no exceptions.
It’s easy to see why people are panicking. Earlier this month Allianz UK CEO Jon Dye warned that Brexit-driven exchange rate fluctuations (in December 2015, £1 would buy you €1.40 – now it’s around €1.15), repair cost increases and labour shortages would lead inevitably to claims inflation.
The majority of cars driven in the UK are imported from EU countries, as are the parts needed to repair them. The auto industry is warning that everything from tyres to brake pads are likely to cost more post-Brexit because of rising import costs. Car producers and repairers are particularly worried about the impact on the parts and components supply chain, and warn that rising costs will be passed onto the customer. There’s also the risk of car parts being held up by the creation of a hard border between the UK and the Continent.
But this could also create opportunities for UKplc. At the moment a UK-build car has on average 44% of UK-made parts. If it’s cheaper and quicker to source parts here than from elsewhere then UK manufacturers could benefit in the long run – and whilst it might take a while to settle down, buying parts made locally could in the longer term prove more cost-effective.
Importantly for us at MSL and the insurers and brokers we work with, this could help to protect and maintain the supply chain – but what about the insurance sector itself? It’s still hard to say during this continued period of uncertainty, but our insurance sector is pretty robust. It’s regarded as world-leading, and can take comfort from insurance models in Switzerland and Norway which have both achieved strong growth while operating in Europe, but out of the EU.
The industry is resilient – it’s been through rough economic times before and has come out the other side. Whilst Brexit is undeniably going to present challenges, it’s important to remember as we wait to see how it plays out that it could also present some opportunities for the sector and for our business.
Glen Eastwood, managing director comments…
“At MSL we continue to monitor the potential post Brexit impacts carefully and ensure that these are mitigated for our clients and their customers.”
If you would like to discuss how MSL can help your business please email or call on 0161 822 8352.