GE Result 2024: Comment and Analysis


More industry reaction will be added later today, here are some early thoughts on Labor’s win;

IE comment;

So far Labour seems to be winning by a huge margin, as they got 35% of the votes cast yesterday and also postal votes. Labour says change is coming, but given the problems in the public sector, as well as the lack of investment in major infrastructure such as power generation, roads, housing, clean rivers, reservoirs etc it is hard to see how any ambitious plan can be implemented within a 5 year parliament. Of course there is always the IMF loan…

Mass migration is accelerating the breakdown of infrastructure, which many in business consider a good thing. Bringing a million people a year into the economy can boost growth, if they are skilled workers. But a large proportion of the young people coming to the U.K. are not skilled, many don’t speak English very well and hide their true identities. It also creates an ever-increasing challenge for insurance companies, as people who live on the margins of the hidden economy (nail bars, takeaway deliveries, car washes, etc.) generally don’t take out insurance on vehicles, healthcare or properties. Verifying customer ID is going to be one of the growth areas in insurance tech over the next 5-10 years.

The challenge in terms of economic growth is to empower start-ups with lower CTs, 10k per year tax free dividends and lower employer NI for companies with 10 employees/250k turnover. But that certainly doesn’t look good to socialists. It’s not something the Conservatives have bothered to do since 2010, in fact they’ve penalised those running small businesses. It’s hard to see that mindset changing under Labour, so insurance brands can expect more regulation, more taxation and more MPs speaking out against any decent profit margins. In many ways it will be a hostile environment for business and wealthy individuals – expect an exodus once the emergency budget is passed. And that will happen, Labour will run out of cash very quickly, about 18 months from now.

There are interesting times ahead. Here are some thoughts from Martin Matthews, MD SSP BrokerFollowing the initial general election results;

“Labor’s promise to close tax loopholes may have an impact on investment decisions in the insurance sector. However, by maintaining tax stability they are also providing a predictable environment for insurers to plan their operations and product offerings. Stability is vital for the broker market we support, so we are keen to see how this develops.”

“Regarding rising premiums, after accusing the Conservative government of allowing car insurance costs to soar, it will be interesting to see how the Labour Party plans to tackle rising costs. Insurance providers are bearing the rising costs, with the average motor insurance claim rising by 8% to £4,800. I doubt that fixing one million potholes across England will reduce the cost of claims significantly. But it’s a start.

“It would probably be unwise to promise consumers cheaper insurance without a detailed understanding of the issues faced by insurance providers. The costs faced by insurers are manifold – there is no magic wand to tackle the cost of repairs, replacement vehicles, theft and fraud. This is a multi-layered problem that requires a multi-layered solution as set out by the ABI.

“It has been a challenge for successive governments in the digital age to tackle some of the complex issues in the general insurance ecosystem. It would be encouraging if the new government could force the relevant regulatory bodies to focus on divisive points such as the credit hire temporary vehicle market, the hiding of consumer acquisition costs, software monopolies in certain product lines, brand stacking and the industry-wide reluctance to share quote manipulation and gamification data. All of these will have a material impact on the price the consumer pays.”

“Labour has also emphasised its plans to use consumer charges to enhance the international competitiveness of the UK’s financial services sector. The party aims to streamline the regulatory rulebook in line with consumer charges, which, they argue, will strengthen international engagement in financial services and develop a more collaborative relationship with the EU.

“As experts in consumer choice, we know that brokers have invested heavily in adopting consumer fees, rebuilding their operations to provide better outcomes for their clients. And for those organizations, there should be nothing to worry about with the new government.

“But any company attempting to delay or ignore consumer duty expectations could be putting their organisation at significant risk, as we expect guidance, alongside ESG, to play a strong role in the new Labor government.”

Brown Jacobson

Gerard HanrattyThe head of health and life sciences at UK and Ireland law firm Browne Jacobson, said: “With so much to do to bring about positive change in the NHS, the new government’s healthcare strategy must include short-term, medium and long-term priorities that gradually begin to move us from a curative to a preventive system.

“Reforms in dentistry, mental health and smoking are immediate areas that will help proactively address major health and service issues

“Clearing NHS waiting lists within five years will be a more challenging task, so the government must find a way to make it easier for the private sector to partner with trusts and fill the gap in providing vital services. Identifying the right legal framework for provider collaboration could lead to better services, cost efficiency and transparency for patients.

“At the same time, we must continue to embrace the role of technology and data in the modern healthcare system while protecting patients.”

“A clear AI regulation strategy is needed, alongside further development of the NHS app to enable patients to manage their medicines, appointments and health needs.

“It must be developed to enable as much cross-border, data-driven healthcare as possible. By striking a delicate balance between fostering innovation and ensuring accountability through ethical guidelines and standards for AI development and deployment, we can create a more efficient and prevention-focused healthcare system.”

Starpeak Insurance

Julian HuxFounder & Managing Director, Starpeak Insurance Solutions, It was added;

“Labour’s general election win should be a step in the right direction when it comes to tackling the ongoing issue of a lack of insurance for small businesses. SMEs have had a hard time over the last few years coping with the cost-of-living crisis and other economic challenges, which has ultimately led to cost-cutting. Unfortunately, insurance cover is also one of the casualties. Small businesses should have better cash flow as a result of Labour’s promise to eliminate delays in the payment of invoices – meaning more businesses will be able to pay insurance cover on time and protect themselves from potential risk.”

The pledge to address skills shortages is also good news for the insurance industry. Our sector is grappling with an ageing workforce and struggling to attract new, ambitious talent. The launch of the new Colleges of Technical Excellence hopes to attract more young people into insurance by showcasing the range of new roles created by technology in the sector.”

ACSO

Commenting on the results of the 2024 general election, Matthew Maxwell Scott, Executive Director of the Association of Consumer Support Organisations (ACSO), said:

“We congratulate the Labour Party and look forward to working with the new Lord Chancellor and other policymakers to support consumers in the civil justice system.”

“Labor’s civil justice legacy is in a parlous state. Records wait to go to court, delays in the modernisation programme, long-pending consultation responses and a completely inconsistent approach to raising costs and fees mean that consumers and their representatives have to deal in a third-rate system that is in desperate need of reform.

“It is troubling that Labour did not mention civil justice at all in its manifesto, but hopefully this was due to a lack of space rather than a lack of attention. Getting the system back on its feet would bring benefits in terms of enabling people to get on with their lives, which would help to achieve the economic growth promised by the new government.”

“We reiterate our call for Labor to announce a civil justice commission, bringing together experts from a wide range of fields, to examine the reforms of the last 20 years and suggest practical, value-for-money improvements. This will include how data, better rules, technology, alternative dispute resolution and new forms of funding including legal expenses insurance can be used to return to a first-class justice system in times of constrained budgets.

“While in opposition, Labor promised to launch an inquiry into dysfunction in the motor insurance industry. If it wants to proceed, it must keep the consumer in mind – whether as premium holder, taxpayer, defendant or claimant – and not bow to vested interests.

“We plan to put pressure on the new government to put civil justice on the political agenda. Criminal justice grabs the headlines, but it is the civil justice system through which most people resolve disputes, sort out employment matters or seek compensation after the negligence of others. Tackling civil justice will send a clear message to the public that Keir Starmer’s Labour government will put the consumer first.”

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