Hot Topic: Brexit

by James Sterling of Neon Underwriting 

Whilst the primary focus to date has been on the underwriting side, it is well worth FIPI claims handlers being alive to relevant claims issues in advance of exiting the EU, to ensure the relevant claims and management personnel have taken account of the potential financial impact on the claims side.

From a claims perspective, we would expect more significant claim trends to materialise if there is a hard (rather than soft) Brexit. For example: 

• If the UK economy is heavily impacted, this could have a knock-on effect on the UK housing market, leading to repossession shortfalls and a similar spate of lender claims against solicitors and valuers that were seen around the time of the 2007/08 credit-crunch.
• From a PI perspective, legal and business consultancy experts could be criticised if pre-Brexit strategy advice is off-point.
• Watch out for D&O claims where managements do not properly prepare for Brexit or business fall-out. 

The D&O exposure in particular should be watched closely given the many warnings from industry leaders that businesses are not ready for Brexit.