The UK Budget 2024: A Mixed Bag for the Insurance Industry
The UK Budget 2024: A Mixed Bag for the Insurance Industry
The UK’s recent budget announcement has sent ripples through various sectors, including the insurance industry. While some measures may offer opportunities, others pose potential challenges.

Chris Lay, CEO of Marsh McLennan UK, pointed out that the regulatory burden must be lifted to help the UK captive regime compete. “We are disappointed that the consultation on a UK captive regime has not been launched,” he stated.

“The UK is home to a world leading insurance market and could become an important home for captive insurers.”

He added: “At present, our current regulatory framework makes it hard for us to compete. Establishing a proportionate and competitive UK captive framework could deliver a major boost to the UK insurance market, demonstrating our innovation and signalling we are open for business.”

Employee benefits looking better

Zurich Insurance’s Corporate Risk team believes that the government’s initiatives to support people returning to work after long-term sickness are a positive step. They highlight the significant economic impact of long-term sickness, as outlined in their report with the Centre for Economics and Business Research (CEBR). The report estimates that long-term sickness could cost the UK economy over £66 billion annually by the end of the decade if effective measures aren’t taken.

Nick Homer, Head of Market Management, Corporate Risk at Zurich Insurance, said: “Additional measures that help people that have suffered long term sickness back into the workplace are clearly welcome. As revealed in our report with the CEBR earlier this year, long term sickness is set to cost the economy more than £66bn a year by the end of the decade unless more is done to help people back to work.” 

He highlighted that additional support for mental health in the workplace was also a step in the right direction. “Mental Health accounts for almost half of all long-term sickness in Britain, yet we know that getting back into work can help mitigate mental health challenges for people. And while getting people back to work is an important step in helping their recovery, it is important to ensure that more employers provide vocational rehabilitation services to ensure that once someone returns to work, they are able to stay in work.”

Homer added: “But in highlighting the importance of vocational rehabilitation, it is also vital that the Government recognise how employers access this often via group income protection insurance, rather than purchase a virtual reality service directly themselves.” 

Charles Bush, Head of Large and Complex Claims at Zurich Insurance, said that the reforms supporting climate-related catastrophes were also welcomed. “The Government’s commitment to providing £2.4bn up until 2025 to support flood resilience and defences is vital to the ongoing resilience of UK communities, businesses and families. Although this investment is welcome, it is essential that funding for the UK’s flood defences is maintained, and alongside other members of the insurance community we would urge the Government to set out a longer-term funding settlement in the next Spending Review. This is a crucial investment to protect people’s homes and businesses and to increase the UK’s resilience to climate change.” 

Changes in regulation to improve nation’s health

Leaders also applauded moves to tighten up public health regulations and spend more on research into damaging behaviours – with particular reference to the widespread use of vapes among young people. 

Amy Brettell, Managing Director of Zurich Municipal said: “More than five million people now use vapes compared to just 800,000 in 2012. More alarmingly, one in seven children aged between five and 17 have been caught vaping according to a survey commissioned by Zurich Insurance last month. So, anything that discourages this growing addiction must be welcomed. Coupled with the ban on the sale of single use vapes from the 1st of June, the dangers posed by these devices should reduce significantly in the coming months.”

She continued: “We know from our own data that lithium-ion batteries, found in single-use vape products, cause significant environmental damage as well as fires. This is a growing risk as our latest FOI data from the Fire and Rescue service reveals the number of fires caused by lithium-ion batteries in vapes has more than doubled in the last two years alone.” 

Time will tell regarding financial stability

With the new Budget making significant changes to business contributions, the health of the economy, particularly in this geopolitically turbulent period, will become apparent over time, said  Paul Noble, CEO of Chetwood Bank (formerly Chetwood Financial).

He said: “The property market was certainly a major focus of the Chancellor’s speech. With planning reforms and housebuilding promises, the Budget reaffirmed Labour’s manifesto pledge to tackle the UK’s housing shortage. But those are long-term strategies – in the here and now, it is the reforms to Stamp Duty and Inheritance Tax that will impact the market, forcing landlords and property investors to consider their plans, particularly with the Renters Reform Bill and new EPC rules already on the table.  

“The mortgage industry must move quickly to adapt in line with these changes. For specialist lenders, the focus must be on supporting landlords and investors who may now want to change their business model. No doubt some landlords will alter their long-term plans in light of the tax reforms, while others will be concerned with the impact of the increase in the rates of CGT and the higher SDLT surcharge for second homes.”

Noble added: “It will take some time for the dust to settle from today’s Budget. But now more than ever, lenders have to combine the right products with exceptional client support. This, in turn, will allow all manner of property buyers, as well as existing property owners, to make informed decisions and execute their own plans with confidence.” 

A Budget that will hit middle class families

A spike in migration for UK residents the worst hit by the new Budget is to be expected, said financial expert Nigel Green, CEO of deVere Group.

deVere Group’s offices across Europe, the Middle East, and Asia have already reported a spike in interest from British clients keen to explore new residency options. He said that countries like Spain, Italy, Switzerland, Dubai, and Singapore are emerging as attractive alternatives for those ready to escape the UK’s intensifying tax landscape. 

Green explained: The mass departure of high-net-worth individuals could be devastating for the UK economy, which has long relied on their contributions through taxes, investments, and job creation. 

“These new measures are a clear disincentive to live, work, and invest in the UK. We’re already seeing a surge in interest as individuals and families look to secure their financial futures elsewhere.”

Green said that the ‘sweeping tax reforms’ target those seen by the government as “low-hanging fruit” for revenue, imposing higher levies on capital gains, inheritance, and pension savings. 

He also pointed out  that middle-class families with property, pensions, or business stakes now face a growing tax burden that risks eroding their financial stability and discouraging long-term planning.

“Yet, the ripple effect is likely to hit far beyond the wealthiest few,” he added. 

A disappointing result for businesses 

Julian Hucks, Founder and Managing Director, Starpeak Insurance Solutions, discussed the outcome means for SMEs from an insurance perspective. 

He said: “The government has missed an opportunity to help the UK’s small businesses by not announcing a reduction in Insurance Premium Tax (IPT), which currently sits at 12%. At the same time, the announcement of a 1.2% increase in National Insurance contributions demonstrates again that the concerns of small businesses have been largely overlooked. With rising operational costs, many small businesses may have to rethink their hiring approach and will face difficult decisions to maintain financial stability. “

Huck continued:“Cutting back on insurance may be tempting for small businesses as they look to shave costs, but it will leave them exposed to substantial risk. Instead of sacrificing insurance cover completely, small businesses should explore more tailored and competitive insurance options. By doing this, organisations can remain protected in a way that is most aligned to their budgets and specific needs.” 

Startup founder Asif Alidina, Co-Founder & CEO of Inntelo AI, also expressed reservations regarding the news that businesses will face bigger costs when it comes to hiring staff. 

Alidina said the budget was disappointing for the Hospitality sector because following years of hardship, this was “not the time to reduce critical support, leaving businesses grappling with higher staffing costs while faced with higher business rates. While the sector’s call for an extension to that relief were addressed, the lower rate of relief will place an additional burden on an industry already under strain.” 

He added that technology would now have a bigger role to play, in stepping in to fill the gaps and improve operational efficiency caused by the necessity of having a smaller workforce. “Now, more than ever, is a pivotal time for the industry. As hospitality businesses strive to reinvent themselves through technology and innovation, the absence of government support risks curtailing these efforts before they can gain momentum.

“AI-driven solutions… can provide a much-needed operational boost, but only if businesses are given the chance to keep their doors open. Let’s hope the sector can adapt quickly enough to navigate these challenges in the absence of broader support.”

Share this article:

APPLY TO SPONSOR

Gain access to the most senior audience of insurance executives, entrepreneurs, and investors. We offer a wide range of opportunities for you to engage with our attendees from networking to thought leadership.

Sponsorship packages provide a wide range of opportunities developed for almost any budget and are designed to help achieve your branding, networking, and/or thought leadership goals. 

Insurtech Insights Europe 2025

Join us at Europe's largest insurtech conference at InterContinental London - The O2
on March 19-20th, uniting over 6,000 senior insurance professionals!