Keoghs Insight


Samantha Ramen

Samantha Ramen


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What impact will different General Election outcomes have on the insurance industry?

Client Alerts06/12/2019

With less than a week to go until polling day, attention is now turning to what comes afterwards…

After another gruelling General Election campaign (the country’s third in a little over four years), the UK is less than a week away from taking to the polls. The campaign battlegrounds have been laid and policies have been announced, scrutinised and debated. The number of undecided voters will be dwindling by the day.

At this point, attention is beginning to turn once again to what will happen in parliament afterwards. Will there be a commanding Conservative majority which will help Prime Minister Boris Johnson sweep through his legislative programme, or will he be hamstrung by a political make up which aims to block him at every turn? Indeed, will Labour be facing the same if it should win the most seats?

We look at the most likely outcomes of next week’s vote, and what the impact of each of them on the insurance industry might be.

Conservative majority

Let’s start with an easy one. If, as widely predicted, the Conservative Party win a majority next week, this would give the Tories both a mandate to pursue their manifesto pledges and enough MPs to win votes in parliament (something that has been a scarcity in recent years).

Should this happen, there should be prompt movement on a number of the regulatory matters of interest to the insurance industry. We can expect the secondary legislation implementing the whiplash reforms and consultations that begun in the last parliament (such as the extension of Fixed Recoverable Costs) to be progressed.

Hung Parliament

Although conventional wisdom predicts a Conservative majority, it has done so before and been wrong. The number of marginal seats and the unknown impact of tactical voting means that a hung parliament is a very real possibility. Unfortunately for the Conservatives, they have run out of friendly parties to make post-election deals with. Their previous partners, the Liberal Democrats and the Northern Irish DUP are no longer viable options.

For the insurance industry, this would mean that a hung parliament would lead us right back to the same situation that the country has been faced with for the last couple of years: an unstable government, a difficulty to pass legislation, and a drawn out Brexit process. It is even likely that there would be another General Election before the mid-point of 2020. With these major distractions, insurance legislation would probably be low on the government’s priority list.

Labour largest party

Although the chances of Labour securing an overall majority are (according to pollsters) extremely slim, it is feasible that they could be the largest party. Shadow Chancellor John McDonnell has indicated that in this eventuality Labour would seek to govern as a minority government, which raises serious questions for their ability to pass legislation. Whilst this might dampen the impact of some of the party’s more eye-catching policies, we can expect the less radical ones such as the pledge to allow employees to recover their legal costs in cases of negligence against their employer, to be taken forward.

In terms of whiplash reform implementation, the general consensus amongst stakeholders is that a repeal of the Labour opposed Civil Liability Act is unnecessary; simply withholding further action insofar as secondary legislation is concerned would render the Act a toothless tiger.