A year on from the EU referendum, John Shepherd, CEO of Shepherd Compello Ltd shares his views on the future of insurance and why the company will continue to prosper.
Insider Quarterly (IQ): How do you feel now about the decision to leave the European Union?
John Shepherd (JS): I will start by saying did we really know what we were voting for last summer? For example, a hard or soft Brexit – I for one never recall this being part of the debate. Leaving the customs union and the ability to trade freely was not on the ballot paper. For sure, free movement and migration were big talking points, with many wanting to see greater restrictions. However, we have since found out that, as far as EU citizens are concerned, these are already in place.
I didn’t know for example that, under European law, it’s OK to deport people from other European Union countries if they fail to find work after three months or if they can’t prove they’ve got sufficient capital to sustain their lifestyle. In Belgium, EU citizens have just three months to show evidence they have found a job or they will be removed from the country. To summarise, I think a great deal of information has come out since, that would have helped us all at the time.
IQ: This time last year you were ‘passionate about staying in Europe’ – how do you feel now?
JS: I still feel passionately about Europe and I also respect the democratic decision to leave. I made that clear last year. I also stated that as a businessman my decision was based on the commercial facts that I could see around me and what I could hear in the market.
A year on, if anything, my business instinct is that it was the wrong decision, but one for which we will have to make the best. The best being for all of us, regardless of the way you voted. Closest to me is the Shepherd Compello family and the people in our firm. For example, we run a multi-lingual service centre in South Quay under our trading name EPG Administration Services Ltd, helping clients across many countries. The majority of this team are not UK citizens, they come from many nations including; France, Bulgaria, Belgium, Ukraine, Italy and Germany.
I have a moral duty to look after this family, which is why I am still passionate about the practicalities of what Brexit means and retaining them within our business.
IQ: What kind of practicalities do you mean?
JS: Well, for starters, we need to appreciate that the largest market this nation trades with is the EU. So let’s talk turkey about Europe rather than chlorinated chickens from The USA. We need the ability to trade in the EU at Shepherd Compello, as this represents a large proportion of our business. My immediate concern is that we are a year on and with the clock ticking, we have no real clarity on what will happen. This means that making informed business decisions is impossible.
Multi-national firms with huge resources and operations around Europe are already announcing that they are on the move. Liberty Specialty Markets, RSA, AIG, QBE, Lloyd’s, Markel, Beazley, FM Global, CNA Hardy and Chaucer are moving parts of their business. Interestingly, their destinations include; Ireland, Luxembourg, Belgium and Germany – so there is no consensus on where to go. Also, for firms who do not have the luxury of the resources or ready-made hubs, the decisions are tough. For us to set up a hub in Europe would be a considerable investment in time and money. We do not have teams of strategists around the world, but we do want to trade and continue to fly the flag. Add to this the fog that hangs over the whole process and you can see the challenge.
IQ: You talk about a fog – what needs to be done to lift it?
JS: I think that is a really good question and our industry bears a responsibility to lobby for our interests and the wider economy. I read that, according to the EY Brexit Tracker, some 68% of firms have said nothing about Brexit. Think about that, the single biggest issue in Britain at the moment and most business leaders are not willing to talk about the ramifications. That is why it is refreshing to see the CBI announcing that we should stay in the customs union until a post Brexit trade deal is agreed. That kind of clarity would certainly help to lift the fog.
As an industry, I welcome the work done by BIBA, LIIBA, the LMA and Lloyd’s. BIBA is lobbying the government with 11 key questions affecting brokers and their customers during Brexit negotiations. Within their proposals, they ask we ‘preserve our leading position as the European centre of insurance broking’. Who in the UK would disagree with that? Meanwhile, the LMA has set out a roadmap to protect clients’ access to London. They estimate that £8 Billion is brought annually to the market by brokers on behalf of EU customers.
IQ: So what are the key concerns you have that need to be addressed?
JS: For me, there are 3 key issues that would help me and I believe the wider insurance industry. First, we need to understand how the current passporting rights which enable EU financial services companies to trade freely in the EU will be affected. Second, a roadmap detailing the key milestones, because, as it stands it is very vague and some are even questioning if we will meet the 2-year departure deadline. Third and this is linked to point 2, we need clarity on the transitional arrangements and how long these will be in place. Talk of a cliff edge is emotive and not in the least helpful to business.
As it stands, we are being asked to run a business, with new rules, without knowing what those rules will be. To illustrate this, look at what Andrew Bailey at the FCA has to say. He wonders how useful it is for firms to make contingency plans when they have no idea what the outcome of negotiations is likely to be.
IQ: How do you view the ‘Brexit’ future?
JS: I am, by nature, a half glass full person. Of course, I have concerns, which I have outlined above. However, at an individual, company and industry level, we need to do all that we can to ‘drive forward together’ – that’s what Compello means after all!
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