The impact of the general election on the insurance industry

The upcoming general election in the UK, scheduled for 4 July 2024, promises to bring significant implications for the insurance sector. The outcomes of the election will be shaped by the policy proposals put forward by the main political parties, each carrying potential ramifications that could reshape regulatory landscapes, tax environments, and market dynamics crucial to insurers.

Labour party impact

Regulatory changes

Labour’s platform emphasises stronger employment rights and protections, which could escalate compliance costs for insurers involved in employee benefits and workplace liability insurance. Policies like enhanced statutory sick pay and expanded family-friendly rights may alter the landscape for health and life insurance products.

Tax policy

Labour’s intention to close tax loopholes, such as the carried interest loophole, might influence investment patterns within the insurance sector. However, their commitment to maintaining major taxes like VAT and income tax could provide stability.

Corporate governance

Proposals for increased transparency in gender, ethnicity, and disability pay gaps could necessitate stricter reporting from insurance firms, potentially impacting operational costs and administrative processes.

Conservative party impact

Tax cuts

The Conservative party’s promise to reduce national insurance and maintain corporation tax levels could reduce operational costs for insurers and increase consumer disposable income, potentially boosting demand for insurance products.

Regulatory environment

Plans to simplify administrative processes and foster a flexible workforce through increased apprenticeships could enhance operational efficiency within insurance firms.

Market stability

With a focus on economic stability and gradual tax reductions, the Conservative policies aim to create a conducive environment for investment and growth in the insurance industry, supporting long-term business planning and risk management strategies.

Broader economic context

Regardless of the election outcome, both parties share commitments to maintaining tax stability and enhancing social protections. This continuity could offer a predictable environment for insurers to plan their operations and product offerings. Changes in social protections could drive shifts in demand for insurance products like health, life, and employment-related insurances.

The impact of the general election on the insurance industry hinges on the specific policies enacted post-election. Labour’s proposals may lead to increased regulatory burdens and compliance costs, while the Conservative agenda might create a more tax-friendly and operationally efficient environment. Insurers will need to adapt swiftly to these potential changes to optimise their strategies and offerings in response to the evolving political landscape.