What impact might a possible change to the single currency have on the insurance industry? Andy Cook says it's a question worth asking
The last few weeks have seen a shift in perception of the euro. Where it was perceived as a theoretical possibility, it is now being discussed at higher levels within the industry from a practical viewpoint. Strategic business plans are being dusted off and programme managers have been appointed to pinpoint actions necessary to comply with the introduction of the currency and to minimise the compliance cost (see page 16).
The largest insurers are worried. They can assess which bits of their business the euro will affect, but they don't know when it will happen or for how long the transition from sterling to euro will last.
It seems that the biggest impact will be on IT systems, where every line of code that relates to pounds and pence will have to be rewritten to accommodate euros and cents.
But all literature will have to be rewritten, staff will have to be retrained and underwriting ratios will be affected as investment returns shift.
The really messy bit though is the transition period. Will call centres have to run two screens per agent, one in sterling and one in euros? Everything will have to be duplicated: policies, product information and quotes. And what about interactions with suppliers. Will garages bill you in euro or sterling? Will insurers' computer systems be talking the same language as broker systems?
Given the amount of ground that needs to be made up in the opinion polls by the pro-euro lobby, it may be too early to be losing sleep. But that hasn't stopped the big composites thinking hard about how to minimise the impact.
It may well be worth thinking about how your business would be affected too.