The United Kingdom has been at the centre of insurance and risk management since maritime trade and shipping was insured at Lloyd’s in the City of London more than 325 years ago. And while the City and the Corporation of Lloyd’s are British institutions, insurance in the UK continues to dominate because it harnesses the best the world has to offer: talent, markets and innovation.
In 2015, the insurance industry contributed billions of pounds directly to the UK’s gross domestic product; and the services sector as a whole comprised 80% of the UK economy. This marketplace does not thrive in isolation. Talent is a true differentiator for the City of London, and to create a barrier between the industry that addresses the world’s most complex risks and the global talent needed to do this will reverberate far beyond the Square Mile. If Britain votes to leave the European Union, foreign investment, trade, and supply chains may be constrained. And in the event of a Brexit, the centre of excellence driven by innovation that has set London apart in the insurance space will be deeply challenged.
For these reasons, I believe the UK should remain in the EU.
First, it is absolutely vital for our business to attract and retain the best and brightest talent from around the world. The Lloyd’s and London insurance marketplace directly employs 34,000 experts, and thousands more when you consider the broader professional services industry. This is a key asset for this country, and would be challenged if the UK were to become isolated from Europe. A Brexit discourages the flow of talented professionals from Europe into the UK, and sends a message to global experts – the people London has historically attracted in droves – that the UK values its sovereignty more than its expertise.
Second, in today’s interconnected world, the risks of disruption are multiplied by the globalisation of even individual transactions. While a client’s insurance programme may ultimately be placed in London, today’s risks are truly borderless. It is a daily occurrence for my colleagues to work with complex multinational clients: say, a German client to insure risks in Malaysia undertaken by an Italian subsidiary. The most challenging of these programmes are placed in the London market, based on the innovative approach to underwriting and risk transfer led by talented professionals from all over the world.
We believe that clients could potentially lose coverage options in a post-Brexit world. As an example, UK-based insurers may be disadvantaged by their lack of ability to easily do business with the European Union, a freedom they currently enjoy, and a general environment of uncertainty regarding solvency requirements after a Leave vote. Leaving the EU jeopardises the UK’s leading position in the epicentre of our global service economy.
Equally concerning is how businesses may need to reconsider planned investment in innovation and new solutions in the UK, as the loss of free market access creates material business challenges and deep uncertainty. Would competitor centres within the single market, such as Frankfurt, Munich, or Paris draw business and investment away from the UK? Further, would the supply chains of large British multinationals become more risky and potentially weaker as formalised links are replaced with a structure that has yet to be determined?
As an organization, Aon has made significant investments in the UK, from moving our headquarters to London in 2012, creating our game-changing global headquarters space in the Leadenhall Building, and building our industry-leading apprenticeships programme to invest in the insurance leaders of tomorrow. Our firm took these steps with confidence because we believe in the UK market, believe in the power of connectivity over that of isolation, and believe in what we can accomplish as a firm with superior talent, markets, and innovation.
If we look back at this time in five years from now, the right decision will have been the one that attracts the best talent, strengthens markets, fosters innovation, and ensures London’s position in the global economy.
In our world, risk is inevitable and we manage it accordingly – but leaving the EU is an unnecessary gamble.
Greg Case, President and Chief Executive Officer, Aon plc