Aon is redomiciling its HQ from the US to the UK and other insurance firms could make the same move. For the time being, however, it’s more likely to be a ‘brass plate’ than a big driver of new jobs.
Insurance firms are increasingly casting approving glances towards the UK’s new lower rate of corporation tax, which is set to fall from 24% to 22% by 2014.
Marsh & Maclennan, the New York-based insurance broker, is looking for office space ahead of a London redomicile, according to Insurance Times. The need to keep up with the competition is creating rumours of various insurance firms scoping out London office space, adds Colin Graham, UK insurance tax leader at PwC.
“London has always been an attractive place for insurance companies to do business, but the changes to the tax regime recently have increased its appeal,” he says. “This isn’t restricted to US companies, but we could see firms redomiciling from Ireland and Bermuda too.”
But jobs aren’t necessarily created as a result of these moves. Aon, for example, is shifting fewer than 20 senior executives (on substantial relocation packages) to the UK as a result of the move and hasn’t talked up any expansion plans here.
Let’s not forget that it wasn’t so long ago that Ireland, where corporation tax is just 12.5%, was being touted as the place to be for insurance firms after Zurich UK redomiciled there in 2008. There was, however, no physical transferral of business from the UK.
Paul Walsh, CEO of Ireland-based insurance-focused recruiters Acumen Resources, says the benefit of firms redomiciling to Ireland has not been felt in recruitment terms. “There’s a brass plate above the door, and maybe a couple of administrative staff, but nothing really high end in terms of actuarial or underwriting positions created,” he says. “If a firm already has a presence here, then they have expanded, but it’s been a second order effect, rather than something built into the business model.”
But the City has one relatively unique factor going for it – a concentration of locally available, highly skilled talent. As we’ve mentioned before, this is one thing keeping insurance firms here. Over time, it could be something that encourages more companies to expand.
“The changes to our tax laws has made the UK more competitive, and I’m confident that more insurance firms will commit to building the scale of their resources in the long run,” says Graham.