By Stuart Dobbins, Technical Claims Director
In a shock twist to an already surprising election season, Count Binface failed to secure power in the UK on the 4th July, with the plucky up-and-comer Sir Keir Starmer leading Labour into No. 10. So what might this mean for the insurance sector?
The short answer – It’s a bit too early to say and we probably won’t know anything until the King’s Speech.
The longer answer – While the above is true, there are also some clues that can be gleaned from Labour’s manifesto and other pronouncements that could give an indication of the type of governmental approach we will see towards the sector.
How will the new Labour government affect SME businesses?
For the last few years this sector has been pummeled by the cost of living crisis, COVID-19, Brexit and other myriad economic factors. This, inevitably, has led to cost-cutting, occasionally in respect of either the reduction of Sums Insured or the failure to increase them in line with inflation. As such, underinsurance has become a noticeably widespread phenomenon since 2020, leaving businesses that were already struggling in the position of receiving claim payments that were lower than the full extent of their loss.
Labour has promised to address issues relating to the late payment of invoices to small businesses, which it is hoped will improve cash flow and therefore support the solvency of these companies. In turn, it is hoped that businesses will therefore be less reluctant to consider increases in their Sums Insured and the corresponding premium cost.
How will the new Labour government affect your workforce?
Post-COVID, it has been a noted feature of the insurance industry that a large swathe of experienced staff have decided to move away from the sector, either through retirement or engaging in a late-career reduction of their working hours. This has, in turn, led to concerns that insurers especially do not have the requisite breadth of skills and knowledge within their workforce to cope with the technical challenges which modern businesses now have to address. This is not just in the relatively new field of cyber insurance, with its associated considerations of the implications of AI for working practices and questions of legal negligence, but also in respect of more established areas of cover which have recently seen significant attention following legislation such as the Building Safety Act. What is certain is that the practice of insurance is only going to become more complex, which will in turn require a highly-skilled, professional workforce in order to meet the multiplicity of risks for which cover is available.
Labour has promised to introduce new ‘Technical Excellence Colleges’ in an effort to entice more young people into further education outside of the more traditional routes of Sixth Form/University. These Technical Excellence Colleges will aim to produce a highly-trained workforce whose focus will be informed by the input of employers and the needs of the economy. It is therefore hoped that this initiative will help to expand the base of new employees to the insurance industry and broaden the skill set of those engaged with the very modern challenges of risk and coverage.
How the new Labour government may affect your Employment
Pre-election, Labour pledged to undertake the “biggest upgrade to rights at work for a generation”, and it is expected that this area of law will be one of the main focusses of the initial round of legislation brought in by the new government.
One of the key issues in this regard will be in the area of unfair dismissal, given that Labour has promised to introduce “basic individual rights from day one for all workers”, thus replacing the current system wherein workers have to wait up to two years before accessing legal protections against unfair dismissal. At present it is not clear how this intention will be reflected in legislation, nor how it will be assumed to work in practice, but it seems clear that employers will find themselves having to shift their perspective on new hires as well as providing greater evidence to show that they had acted reasonably in the event of a dismissal. This in turn is likely to lead to a greater reliance on Employment Practices/Legal Expenses covers, as businesses could find themselves falling foul of legislation that is more stringent than in previous years.
In conclusion, What does the new Labour government might mean for businesses and business insurance policies?
There will no doubt be further policy updates as the new government approaches their first King’s Speech and closer scrutiny is applied to their intentions. We will be keeping a close eye on these developments and their implications for ourselves and policyholders alike, and we will keep clients informed of events as they occur.
More from Stuart Dobbins
What are the implications of a fire for businesses?
15th October 2022; A large fire breaks out at a building site in the centre of Leeds. The cause of the fire seems to have been a stray firework, which has ignited the sheeting covering the scaffolding in place. Romero’s Technical Claim’s Director, Stuart Dobbins discusses.
