As of today, June 24th 2016, first day after the UK voted 52% to 48%, to leave the European Union after 43 years, (Brexit), the reaction in the markets has not waited and companies are realigning themselves to face the turmoil. Prime minister David Cameron has pledged to leave office within three months, saying that the country needs new leadership, construction companies are seeing a 20% reduction in the pricing of the office spaces in the UK for the next three years, European companies has halted plans to develop building such as Axa, who having been approved to build the tallest building in London has put a stop to the project, the British Pound has seen the mayor hit in decades, dropping to 1.38 US Dollar per British Pound its deepest in decades and the list is endless. Everything is in turmoil at this time.
The nationalist parties of France, Italy, Spain, Germany and others, has raised their voices to claim a referendum within their own countries to ask the population to leave the EU as well The stock markets from Europe to Asia at this time of the morning, 5:00 am Easter Time in the US, has taken refuge in the US Dollar and German bonds. All is in turmoil and the actions are just beginning. We are about to see what happens when the stock market opens at 9:00 am in New York, but I can anticipate a lot of activity and probably a non-traditional behavior among the dealers. By the time you read this note, we would have already known what happened.
A new world order has begun and it has taken us all by surprise. We did not and could not anticipate the consequences of what this vote could mean for the British, for the world and for us. The social forces have started to move the pendulum towards a new social order yet to be seen or discovered.
Issues such as the African and the Syrian immigration, ISIS, Social Inequality, the disproportionately unbalance of the Gross Domestic Product within the EU country members and many other relevant factors have played a role in this decision. The EU as we knew it does no longer exists and is under threat of changing even more in the next few years. The world today is a different place and the British has taken the lead is making this change and other will follow.
No one can predict the outcome of this results, nevertheless, today it does not look good for the economy and T Row Price, one of the largest Mutual Fund Companies in the World says that the threat of a global recession is 50% today. Such are the consequences of today’s counting of the Brexit vote.
On the other side, new leaders are emerging within the UK, the probability of Scotland leaving the United Kingdom in the future is even greater because the people of that country voted to stay and the Prime Minister of Scotland already spoke and said that they will reassess way for a new referendum to leave the UK and stay within the EU. Border controls will probably be tightening and the immigration process to the UK will be stricter. Everything is so new and surprising that few were prepared for this. We will keep seeing the developing in the next few days.
As for the Insurance industry, there could probably be mayor changes as well. I cannot predict today what will happen, but I know that some companies from London had been preparing for years for this new world order if it happens as it is occurring today. Hiscox, one of our carriers, is one of those companies who has been working on that strategy for years when they move their headquarter to Bermuda and kept their London operations intact.
As per the players in the international health insurance market, the compliance issue keeps being of high relevance. The actual players are more concerned about the future and compliance is a relevant task that needs to be addressed carefully. New strategies need to be developed. New ideas have to come to the drawing board. New elements have to be brought in and we at Interbrokers are working on that.
From our own perspective, we will assess this new order and will take measures towards securing our future. We will see what happens from now on and will make our decisions as well to keep servicing our clients in a proper manner. Our top priority is our clients and associates while protecting the wellbeing of the business.
Probably a new business model would have to be developed in order to be up to the times.
With my warmest regards,