The Covid-19 (Coronavirus) pandemic was already taking its toll on the UK labour market in the lead up to the end of the transition period. Unemployment reached 5.1% by December 2020 -  its highest rate in almost five years, while redundancies increased to reach a record high of 370,000 between August and October 2020. [1]

The Coronavirus Job Retention Scheme (known as the ‘furlough scheme’) stemmed the tide of many job losses, reportedly protecting more than 11 million jobs since its inception in March 2020. However many sectors are still reeling from the effects of lockdown, including the hospitality, retail and entertainment industries.

The Labour Market Outlook points to some signs of recovery, partly due to the extension of the furlough scheme and the Brexit Free Trade agreement. However employer confidence varies widely by sector and region, and certain industries will be more affected by Brexit than others, particularly those which rely on cross-border trade, such as the wholesale and retail sectors.

In January 2021, UK goods exports to the European Union fell by 40.7%, and imports also markedly dropped[4], with machinery, transport equipment, chemicals and car imports particularly affected. Contributing factors are said to include so-called Brexit ‘red tape’, and higher costs resulting from excessive and complicated paperwork and border checks. It’s also suspected that some businesses may still be using up extra supplies which they’d stockpiled in the lead-up to Brexit.

Supply chains have undoubtedly been impacted by the new checks and administration for imports and exports, and some goods have therefore become more difficult and expensive to source, such as vehicle parts. Insurers suspect that this may lead to an uptick in claims inflation, with some already seeing this across motor and property classes.

Businesses are being advised to identify their EU trading partners and undertake scenario planning for future supply needs. They’re also encouraged to engage in early communication with their customers to make them aware of any possible delays.

Until the trade deal was agreed, the overarching law governing use of data was the General Data Protection Regulation (GDPR). This ceased to apply in the UK following the end of the transition period and was superseded by the DPPEC (Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit)) Regulations 2019, which merged UK data laws with the requirements of the EU GDPR. The end result is known as ‘the UK GDPR’. 

The trade agreement contains a bridging mechanism that allows for the continued free flow of personal data from the EU/EEA to the UK for up to six months. This means that little will change in the short-term for organisations which already comply with GDPR. However, businesses are being urged to take steps to ensure they remain compliant with data protection laws and amend any existing documentation to align it to the requirements of the UK GDPR. Further, any organisation that offers goods and services to EU residents must also comply with the EU GDPR. The Information Commissioner’s Office (ICO) has a wealth of information and guidance for businesses.

There will also be an action for the approximately 300,000 UK businesses with .eu domain names. Following Brexit, only companies based in the EU will have the right to register a .eu domain name, meaning organisations will either need to transfer ownership to a sister company in the EU or convert the registration to a .co.uk or com domain. Consequently, more than 80,000 .eu website domains have been suspended.[5]

The UK insurance industry has a deserved reputation as a global centre of expertise and it will be important to maintain existing trading arrangements and formulate new ones going forwards. It’s clearly a turbulent time for UK businesses and the insurance industry has a role to play in supporting them through this period. One way is through reviewing customers’ risk profiles in light of the post-Brexit environment and ensuring they avoid the risk of underinsurance, particularly where they’ve stockpiled additional materials. Brokers will need to work closely with customers to ensure all necessary documentation is completed for the swift processing of claims, and provide clarity where a risk is not covered.

The industry can also assist organisations through keeping business owners apprised of any Brexit-related developments which may impact upon their policies, and by providing access and sign-posting to relevant risk management information and guidance.