At a glance
- News that the economy contracted in the last quarter of 2012 was a stark reminder of the challenges facing the UK as 2013 gets underway
News that the economy contracted in the last quarter of 2012 was a stark reminder of the challenges facing the UK as 2013 gets underway. Insurers and brokers have a key role in helping UK business survive and grow through offering flexibility and providing effective risk management for key sectors.
The growth challenge
Along with the well-rehearsed near term risks, the UK is beset by more structural challenges. The government’s industrial policy seeks to shift the balance of the economy, while recent statistics from the ONS show changes to the pattern of trade.
In early January, the statistics body said that in volume terms export of goods to the EU was 3.7% lower in the three months to November 2012 compared to a year earlier, while exports to the rest of the world grew by 6.8%.
Through applying segment knowledge and risk management expertise, insurers and brokers have a key role in helping businesses access these new markets and supporting growth sectors.
Safeguards for growth
The Chartered Institute for Insurance (CII) report Future Risk: Insuring for a Stronger World states: “With its unique focus on risk management, insurers are well placed to provide guidance and solutions about the most complex hazards we face.”
There is a responsibility to design policies that provide value for businesses and help them grow
The CII report identifies the growth of technology as key to the economy but warns of the ‘black swans’ that could arise, such as cyber crime and data loss or corruption. Beyond this, businesses must negotiate the potential for political unrest in emerging markets – potential new trading partners – and the impacts of climate change.
On climate change, Dr Swenja Surminski from the London School of Economics is quoted in the report: “Comprehensive risk reduction, aligned with climate adaptation measures can help developing countries manage the risks they face. Insurance risk transfer can be a useful component in this strategy”.
Meanwhile, BIBA’s 2013 Manifesto, to be published in February, will set out how BIBA activities help the government’s growth agenda – including its desire to ensure there is a “level playing field for customers in regard to regulation and sale of insurance”.
To help the UK economy in 2013, BIBA chief executive Eric Galbraith pointed to the role brokers play in areas like flooding, motor and liability.
“This facilitates business confidence, peace of mind, competitiveness, sustainability, continuity and of course growth in both domestic and international trade,” he said.
Out of balance
While the coalition may be wrangling over most issues, there is some consensus on rebalancing the economy.
In a speech in September 2012, business secretary Vince Cable outlined the focus of the government’s revitalised industrial strategy that will continue to be rolled out this year.
First up for attention was manufacturing, particularly advanced manufacturing (including aerospace, automotive and life sciences); the second, knowledge-intensive services, including the traded aspects of higher education and the information economy (areas like design and ICT); then a third group, enabling sectors, which includes construction and green energy.
Many of these have been identified as the key sources for future growth, with specific ways the government can help identified: from the development of supply chains, and access to finance for start-ups and SMEs to specific intervention in an industry where skills have disappeared (Cable gave textiles as an example in his speech).
For insurers, designing cover to protect businesses in some of these growth areas and firms expanding to new markets can provide those key safeguards to growth.
Zurich sales, distribution and marketing director Darren Pacey said: “There is a responsibility to design policies that provide value for businesses and help them grow. We can do this through better understanding of the different risks and concerns affecting sectors, and designing tailored solutions.
“For us that is providing cover for specific emerging risks and comprehensive solutions that combine key needs.”