London Matters: Is Reinsurance Set to Grow, or Stagnate in 2021?

The London Market Group (LMG) and McKinsey launched the London Matters 2020 report today, an update on the London (re)insurance market’s position between 2010 and 2018. The data and analysis reflect this period, but the report does not include any impact of the COVID-19 pandemic.

Key statistics include:

  • The London Market remains the largest global (re)insurance hub, and the gap between London and the total gross written premium written in Bermuda, Switzerland and Singapore has widened from $16bn in 2015 to $23bn in 2018.
  • London’s share of the global commercial (re)insurance market has remained steady since 2010 at an average of 7.6%. Commercial insurance share has grown by 0.1 percentage point, while its share of global reinsurance has fallen by 1.7 percentage points.
  • North America replaces the UK & Ireland as the biggest source of income into the London Market.
  • London continued to underperform in Asia and Africa.

Matthew Moore, Chair of the LMG said; “This report finds the London Market in good shape. Aggregate market share held steady, maintaining London’s global dominance and attracting more US business than ever before. Nevertheless, some of the underlying challenges remain. Our share of reinsurance business is shrinking and in emerging markets it remains small.

“However, the effects on market structure, products, processes and working practices caused by the COVID-19 crisis are likely to be profound and long-lasting. The current crisis shows that the London Market can support its trading partners and clients through the toughest of challenges, and the fact it is doing so today is in part down to its adoption of previous LMG initiatives. For example, electronic placement has meant that remote working has been possible, and that contracts have been placed and renewed with legal certainty. The (re)insurance industry’s support for the wider business community has never been more important, whatever the circumstances they face.”

The report tracks the key data on the London Market including overall size, breakdown by class of business, geographical sources of risks and its financial contribution. For the first time it looks specifically at investment in the London Market, the contribution its claims make to the wider global economy and changes to the make-up of its (re)insurers.

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INDUSTRY COMMENT

Jennette Newman, partner Clyde & Co, and vice-president, UK FOIL,

“If the London Matters report tells us anything, it’s that London’s position in the global insurance industry is secure – though with the important caveat that the report takes no account of COVID-19.

“As the market formulates its response on the pandemic, one clear positive is its proven ability to support partners and clients through difficult times using PPL and other electronic placing mechanisms, such as Whitespace. These have enabled the market to carry on transacting business with efficiency and certainty.

“The focus now will be on building closer partnerships with clients as boards refocus on risk and the role of insurance going forward.”

Responding to this morning’s publication of the new edition of London Matters, Christopher Croft, CEO of broker representative body LIIBA, said:
“Our members welcome this latest edition of London Matters. Right back at the start of the process, we committed to revisit this document regularly and update it to capture the latest developments. Clearly Covid-19 will have a profound effect on many of the themes highlighted in the report.  We’re studying it closely and look forward to discussing its findings with the wider market.”
IE COMMENT;
Post Covid-19 the industry is looking at less international travel, fewer events, more online trading and a great dispersal of talent globally.
The growth patterns of the last decade don’t really apply to the future. What matters is sifting data accurately before assessing risk, genuine solvency, customer trust and that element of trust being shard online. Partnerships will be an integral part of all insurance risk, admin and claims settlement after Corona.
Why? Because those who decide to stand alone will find life that bit harder, more time-consuming in terms of understanding data, rating risk and reinsuring major risks without locally based partners or subsidiaries. In some regards London doesn’t matter so much, because the location of any office is becoming irrelevant in the process of rating risk. What matters far more is selling London as a brand, with values the global market knows and trusts.
About alastair walker (3695 Articles)
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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