We're sorry but your browser is not supported by Marsh.com

For the best experience, please upgrade to a supported browser:



Brexit Vote Means Organizations Need to Assess Risks, Insurance Implications


Although it may take years to determine the UK’s new relationship with the European Union (EU) following its EU departure, businesses should start assessing how they will be affected and begin discussions with insurers and risk advisors.

The UK’s vote to leave the EU is unprecedented. Due to the complexity of the negotiations involved, the UK Cabinet Office has predicted it could take up to a decade or more to negotiate a new agreement and replace existing trade deals.

What to Consider Now

Given the possible scenarios* following a "leave" vote outlined by the UK Government, areas companies should be considering in contingency plans include, but are not limited to:

Market Volatility: There is likely to be some level of market turmoil in the near future. For example, following the initial depreciation of the British pound, further currency volatility can be expected over the next few weeks. The volatility is likely to continue to some degree as negotiations are carried out and could stress capital positions, leading to possible credit ratings downgrades for insurers and other financial institutions.

Material Change in Risk: The UK’s decision could cause key aspects of an insurance buyer’s business or planned transactions to change, resulting in a possible material change to the buyer’s risk profile. Now is the time for buyers to raise and resolve with their insurers and risk advisers any implications such changes may have on their risk.

People Issues: Freedom of movement is a fundamental right in the EU, enabling non-UK EU citizens to work freely in the UK and UK nationals to work in other EU countries. Following the “leave” vote this could change.

Passporting Issues: The right of insurers and brokers to “passport” (to carry out business in other countries from a single country license) into the European Economic Area could be restricted following the transition period.

Change in the Legal and Regulatory Environment: After the UK completes its EU departure, the Freedom of Service (FOS) Directive may no longer apply to the UK. Its access to the single market would have to be renegotiated during the transition period. FOS is the right to provide business services on a cross-border basis within the EU.

Organizations should keep a close eye on developments and have a plan to address various outcomes, including speaking with their insurers and risk advisors to address altered risk profiles and changes in insurance needs.

For full details on the UK’s decision to leave the EU, read Insurance Implications Following the UK Vote to Leave the EU. 

*Prior to the referendum, the UK Government issued a paper outlining the possible scenarios that could come to pass in terms of the future relationship between the UK and the EU.

Alternatives to membership: possible models for the United Kingdom outside the European Union, HM Government, March, 2016.