What does the Autumn Statement hold for insurers?

The insurance industry had been awaiting the Autumn Statement with feelings of uncertainty about what changes chancellor George Osborne might announce, but the proposals were positive for the sector.

The statement was a rare pat on the back for the industry on the part of the government as the the chancellor admitted that the government “wants the UK to continue to build on its competitive edge in the insurance sector as a key exporter and important source of long-term investment.

“The changes the government has made to the tax framework have already stimulated interest among overseas insurers in doing more business in the UK and the recent relocation to London of one of the world’s largest brokers is now helping to strengthen the cluster around the London market.

“The government particularly welcomes interest from insurers that meet the conditions for authorisation and that want to do more business in the UK and the government has asked the FSA to ensure that new applications from overseas insurers are processed smoothly.”

Debates about the studiness of some unrated overseas insurers aside, this is a positive announcement from the government, and one welcomed by the ABI.

Osborne also gave a helping hand to the sector by announcing cuts in UK corporation tax from 22% to 21% by 2014, which PwC hailed as a way of boosting competitiveness.

In an ideal world, the government could have announced something more helpful, such as a cut in insurance premium tax but, realistically, yesterday’s statement was one of the best that the insurance industry could expect at the moment, considering the UK’s wider economic problems.