Minimal Brexit disruption for US insurers foreseen: Actuary group

Despite strong links between the United States and the United Kingdom, the potential impacts of Brexit on U.S. insurers will be minimal overall and readily absorbed by the market, according to a report from the Society of Actuaries.

In the report, released Tuesday, the SOA projects the effects of Brexit on U.S. insurers will range from slight to significant, depending on factors such as disruption of policies, trade relationships, treaties and taxes.

The researchers identified three potential Brexit scenarios and the impact they could have on the U.S. insurance market, based on a consistent growth trend, a moderate view of the future impact and a worst-case scenario.

Even in the worst-case scenario the researchers project that U.S. insurance premiums will increase by 20% from 2015 to 2022, compared with 29% growth in the best-case scenario.

“While this is a significant difference in dollar terms — $234 billion in 2022 alone — it still equates to market growth and a positive outlook for the U.S. Even with this high-inflation, high-interest-rate, stronger-dollar environment, the U.S. market is predicted to be only minimally affected,” said the SOA report.

However, if the worst-case view unfolds, disruption to policies, trade relationships, treaties and taxes will affect U.S. insurers and their customers, according to the report.

Reinsurance capacity in Europe could also retract, limiting the flexibility of U.S. insurers in writing coverage, the report said, while U.K. holdings of U.S. firms could see greater losses.

But even in the most extreme view, the U.S. market is predicted to be only minimally affected, said the SOA report.

Sponsored by the SOA Committee on Finance Research, the report was authored by Julie Y. Nye, international insurance consultant at Expat Consulting.