Brexit? Likely implications for business insurances


The EU Referendum is almost upon us. With the public debate awash with claim and counter-claim, Steve Fletcher, Manufacturing Lead at Arthur J. Gallagher cuts through to what he knows about: your business insurances and what might happen to them in the event of the UK voting LEAVE on June 23.

Separation from the EU and Article 50 of the Lisbon Treaty … 

  • Once triggered by the UK Government, Article 50 provides for a two-year exit negotiation period that would re-define our future relationship with the EU. 
  • In that 24 month period, everything would stay the same as it is today with the UK bound by existing EU legislation – unless an agreement was reached earlier. 
  • As the Article 50 negotiations move forward the two-year period could be extended by mutual consent.
  • When negotiations are concluded that’s still not it. The exit deal must then be concluded on behalf of the EU by the EU Council (Consilium) – the political leaders of all EU member states – by a qualified majority after obtaining the consent of the European Parliament. 
  • Any exit process is complex and unpredictable; the UK would not have a vote on the withdrawal agreement. 

A potential BREXIT vote would mean no change - business as usual – to our legislative relationship with the EU until 2018 at least. It would also mean absolutely no change to how – and where – your business insurances operate until formal exit ratification. However there are two changes to UK insurance on the way: The Insurance Act becomes law on 12th August 2016 and insurance premium tax increases to 10% from 1st October 2016.

Should BREXIT become a political reality with all hurdles cleared come 2018/19, there are operational areas of your business insurances that may change, such as:

• Effects on UK-issued insurance policies covering subsidiaries in the EU.

• International freight industry agreements.

• Reciprocal arrangements around the treatment of certain insurable incidents.

• Repeal of unspecified EU Directive legislation.

• Product recall and the Rapid Alert System (RAPEX) for non-food dangerous products.

• Selected consumer protections.

• Withdrawal from EU Supreme Court judgements on areas like product liability, product safety and riskmanagement.

• Likely loss of mutual recognition/passporting for UK financial institutions.

• Likely changes to - and/or uncertainty around - legal and regulatory frameworks: important if you

trade with EU states.

The long term insurance ramifications of a BREXIT vote are impossible to map. What we can say with someconfidence is that Article 50 of the Lisbon Treaty provides for a two-year period where there will be NOinsurance changes for your business other than those already planned through domestic legislation. As yourinsurance broker we’re here to help you plan ahead we’re already assessing the longer-term contingenciesthat firms of all types should consider.

Would you like to talk?

If you want a confidential discussion about your business’s manufacturing risk management and insurance

services please contact Steve Fletcher on Tel: +44 (0) 121 222 0721 or email Steve [email protected]


While we have attempted to ensure that the information contained in this guidance note has been obtained from reliable sources or is otherwise accurate, we

are not responsible for any errors or omissions or inaccuracies. In no event will we be liable for any decision made or action taken in reliance on the

information in this report. The information contained in this note is intended solely to provide general guidance and is provided with the understanding that

the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice or services. As such, it should not be used

as a substitute for consultation with competent advisers and before making any decision you should take independent advice.

Arthur J. Gallagher Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 7th Floor,

55, Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909.

FP401/2016 exp.07.17