The biggest ever survey of the UK insurance industry, conducted on behalf of the Association of British Insurers by management consultants Ernst & Young, is published today. It investigates the state of preparedness for Economic and Monetary Union (EMU). It shows that insurance companies are taking sensible precautions, despite the uncertainty of the UK position.

100 insurance companies responded to the survey. These companies account for over £70 billion of premium between them. Key findings were:

· 87% of insurers have board level sponsorship for their planning for the euro.

· The majority have been considering the impact of the euro on their insurance operations for more than a year. Major companies have been doing this for longer than smaller companies.

· For UK entry, 48% are at the assessment and 32% are at the awareness stage of their projects.

· 54% foresee the euro having a neutral impact on their business, with 25% seeing it as positive and 15% negative. In view of this, as well as uncertainty about UK entry and its timing, and a perceived lack of widespread customer demand for euro-denominated products, few companies are willing to invest heavily in more detailed planning at this stage.

· Over half of all companies, and three quarters of large companies, have started a euro awareness campaign for employees.

Mark Boléat, the ABI's Director General said:

"The major UK insurance companies, which are the ones likely to be most affected by the euro, have been planning for some time, but uncertainty over the UK's position means they are constrained in undertaking more detailed preparations.

"The indications are that UK entry is a fairly neutral issue for British insurance companies but, to reduce to the minimum any potential disadvantage for the British market, insurers are taking prudential steps to prepare. It will certainly be helpful to their longer-term planning to know whether the UK will enter EMU and, if so, when."

Peter Havelock, who leads Ernst & Young's insurance industry euro service line, said:

"Continental European experience in the insurance industry shows that the cost and complexity of EMU conversion will be greater than that for the millennium. Insurers in the UK need to understand the scope and depth of the issue at the earliest possible stage if the industry is to be ready soon after the next election. However, this survey demonstrates that the "perfect planning" so memorably espoused by recent government advertising is being held back by the lack of clarity and certainty around UK entry into the single currency."

Notes

1. A questionnaire was issued to the ABI membership in September 1998. A response rate of 75% was achieved (100 leading UK insurers), one of the most comprehensive surveys of its kind in the UK insurance industry. Ernst & Young was appointed by the ABI to carry out the research programme and produce the report.



2. A report giving fuller details of the results of the survey is attached.



3. Enquiries to:
   
   Malcolm Tarling, ABI 020 7216 7410 (Home: 020 8297 9510)
   Janette Weir, ABI 020 7216 7480
   Peter Havelock, Ernst & Young 020 7931 5069
   David Parrish, Ernst & Young 020 7931 4229 (Mobile: 07771 837331)



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