How will brexit affect small businesses and insurance?

Brexit will affect small businesses, and entrepreneurs living in and trading with the UK will certainly feel the brunt of Brexit’s impact. Even though the timeline remains to be seen, the experts note that business owners are likely to face financial challenges along with upheaval surrounding strategies and operations. Fortunately, the Society of Actuaries predicts that Brexit’s effect on insurance will be minimal.

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Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

UPDATED: Jul 16, 2021

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What effect – if any – will Brexit have on small businesses and insurance in the U.S. and the UK? It might not seem like it, but there are numerous things affecting insurance costs–even social media impacts insurance rates.

It’s impossible to predict exactly what will happen but the odds are good that the market will readily absorb potential impacts.

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Brexit’s Potential Impact on American Insurers

The Society of Actuaries has some great news for American insurers concerned over the potential for trouble associated with Brexit. In a report that took a close look at factors ranging from taxes, trade policies, disruption, and more, the SOA projected that Brexit’s impact is likely to be minimal. However, given the current political climate, it’s impossible to predict exactly what the future will hold.

Researchers with the SOA considered the issue from different angles. Even the worst-case scenario suggested that insurance premiums in the U.S. would continue to increase by 20% by the year 2022, compared with a projected increase of 29% in the best-case scenario.

The SOA report stated:

“While this is a significant difference in dollar terms – $234 billion in 2022 alone – it still equates to market growth and a positive outlook for the U.S. Even with this high-inflation, high-interest-rate, stronger-dollar environment, the U.S. market is predicted to be only minimally affected.”

There’s more to consider than dollars, however. There are things to consider like credit, interest rates, etc. In the event of the worst-case scenario, a significant disruption could occur, affecting American consumers, businesses, and insurers alike.

As the entire European market is likely to be affected, it’s important to take Europe’s reinsurance capacity into consideration when looking at the larger picture.

Retraction could limit U.S. insurers’ ability to offer flexibility when writing coverage. Still, Brexit’s overall impact on American insurance companies is likely to be minimal.

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Potential Challenges for U.S. Insurers Post-Brexit

Deloitte compiled a report that details the potential impacts of Brexit on U.S. insurers. Even though the timeline remains to be seen, the company’s experts note that insurers are likely to face financial challenges along with upheaval surrounding strategies and operations.

Anyone with an interest in the UK’s business landscape should keep a sharp eye on the news and consider how proposed changes will impact various aspects of their own bottom line.

Deloitte’s report outlines major areas where Brexit is likely to impact US insurers:

  • Legal entity structures might need reconsideration
  • Insurers working alongside UK regulators might need to revise business plans for EU operations
  • Global tax policies are likely to change
  • Contractual obligations and arrangements will need to be revisited
  • Current policy information will need to be reviewed for compliance and potentially restructured
  • Costs are likely to change; increases are probably
  • Regulatory costs and product distribution will likely be affected by passport arrangements
  • Some insurers may need to relocate assets in the UK and/or EU
  • Staff training issues will need to be addressed

What happens if other countries opt to leave the European Union in search of greener pastures? There’s no doubt that other exits would compound the impact on American insurers and others.

EU officials have attempted to make exiting undesirable by placing strict regulations on trade, but regulatory action is never a failsafe. Should other nations leave the EU in the wake of Brexit, the playing field will certainly change in response.

Brexit’s Potential Impact on Small Businesses in America and The UK

UK businesses will certainly feel the brunt of Brexit’s impact. London accountants, Accounts & Legal, expressed such a sentiment, reporting that around a quarter of larger SMEs (10+ employees) view Brexit as a major obstacle for their business.

But with only 20 percent of businesses expressing confidence in their ability to find advice and safeguard their futures, private industry is stepping in to take up Government slack.

Big and small business accountants specializing in Brexit’s tax and legal implications are gearing up to assist small businesses throughout the UK as the transition nears, offering assistance with creating plans for future investment and growth despite certain challenges ahead.

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Insurance for small business owners in America may not be directly impacted by Brexit in the same ways their UK counterparts will; however, there’s no doubt that some will feel a pinch, as Brexit will impact everyone who lives in the UK.

Free trade between UK consumers and American businesses may not be directly affected, but UK consumers who spend money with US businesses may find themselves with less to spend.

The impact might be felt across different sectors, notably those offering travel-related services and non-essential goods.

Additionally, small businesses in America are likely to notice some changes in areas including tax and duty reporting, the way personal data is handled, and of course, the way people and goods travel between our nations. Different immigration rules will be implemented, affecting business travel.

At the same time, it’s likely that customs and cross-border financial services will see at least some disruption as policies change and new regulations are set in place. Furthermore, the flow of data may be negatively impacted as laws concerning privacy change.

The cost of goods shipped from the UK to the United States – as well as costs associated with transportation for people and products alike – will almost certainly be impacted by Brexit.

Price increases are forecast across sectors including energy and transportation. The price of fuel, as well as its availability across the UK, could be problematic, at least in the short term, causing panic-buying that could have a serious effect on supplies and prices.


Experts believe that it could take a year or even longer for UK businesses to adapt to the new realities that Brexit poses, but that careful planning is likely to soften the blow for everyone.

Much depends on the way Brexit unfolds. If the UK leaves the EU with a deal in place, the transition will unfold far more smoothly than it will in the event that no deal occurs.

Whatever your sector and whatever your location, it’s best to think in terms of the worst-case scenario. Plan for extra costs, regulatory upheaval, delays, and changes to the way your day to day operations evolve.



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