Can Boris help our industry?

…but other than his announcement of his intention to run for the leadership at the British Insurance Brokers Association conference and that some of his antics such as the zipwire stunt make him an insurance risk, there seems to be nothing.

So I did a bit of research into our more recent PMs instead and the only real link seems to be with John Major. If Wikipedia can be believed, his first job was as a clerk in a London insurance brokerage in 1959.

The next bit is harder to believe but apparently he disliked the job and resigned! Hopefully that experience didn’t influence the introduction of the highly unpopular Insurance Premium Tax (IPT) during his time as PM, although in fairness the then Chancellor, Kenneth Clarke, was probably the actual culprit. Back in 1994 the rate was only 2.5% but it was very controversial and described as a ‘stealth tax on the prudent’. Since then, IPT has been a soft target for subsequent Chancellors with the worst offender being George Osborne who increased it from 4% to 10% during his tenure. Hammond has since increased it to 12%.

With insurance, and probably most industries, it is easier to name politicians deemed to have hindered rather than helped and as well as George Osborne, there are a number that come to mind. Liz Truss really upset insurers when as Lord Chancellor she changed the Ogden discount rate in 2017, costing the industry billions by substantially increasing the cost of personal injury claims overnight. The rate has subsequently been changed again but is still set to have an adverse long-term legacy.

But perhaps Lord Derry Irvine, again as a Lord Chancellor, is responsible for a law causing the greatest consequences for the insurance industry in recent times, albeit unintended. A compensation culture was already emerging following the decisions to allow legal advertising by solicitors and the introduction of conditional fee arrangements (no win no fee) in 1995, even though they were intended to widen access to legal remedies for all and reduce fees.  

However, it was the 1999 Access to Justice Act introduced by Irvine that abolished legal aid for most personal injury claims and gave rise to the claims management industry. Laudable aims at the time and no one will disagree that those genuinely injured because of negligence by another party should be properly compensated, but there can be little argument that this act (which has since been amended again) has encouraged the unscrupulous both in terms of fraudulent claimants and some in the claims management industry.

Boris has actually mentioned insurance since he took office. That is the possibility of a state backed insurance plan to help solve the long-term care problem: arguably a much bigger challenge even than Brexit and an issue that recent Governments have failed to resolve. If he solved that one with insurance as part of the solution, he could be a politician with a positive reputation in the eyes of the insurance industry. However, for now the bigger question is whether he will keep his job long enough to try.