As the London insurance market mulls the pros and cons of electronic trading, young brokers have come down squarely in favour of physical interaction. In a series of workshops run by broker trade body LIIBA, 97% of young brokers said they wanted their working life to comprise at least 50% face-to-face trading with underwriters while half wanted it to be ‘predominantly’ face-to-face.
The brokers also felt that face-to-face, relationship-based trading was a major competitive advantage for London and the source of the market’s differentiation from other international insurance centres. Over 50 young brokers from the London market took part in four workshops during April facilitated by Tysers’ head of global broking and LIIBA board member Jason Collins. Participating brokers were selected by firms with a seat on LIIBA’s board.
Themes raised in the workshops form the basis of a new report from LIIBA published today, Our Face-to-face Future, which captures the views of younger brokers on the future of the London market.
OFFICES STILL HAVE A ROLE TO PLAY
The report notes that while many brokers said they found ‘admin Friday’ a useful way to catch up with organisational tasks, one broker said that she would leave the industry if she was no longer expected to meet people – a sentiment applauded by others attending that session.
Participants did accept that not all London market business could or should be traded in the marketplace. Ultra-complex global programmes, which account for in the region of 20% of London’s business, now tend to be addressed through set piece meetings, whilst commoditised and simple business, often run through facilities, which accounts for around a further 30% of London’s trade was suitable for remote agreement. That, the brokers stressed, left half of London market business suitable for face-to-face interaction.
Broker lounges – often-stylish broker waiting areas in insurers’ offices – were not especially popular with the workshops’ participants. Brokers complained that the 15-minute appointments usually granted by underwriters allowed insufficient time for a productive discussion after clearing building security, calling a lift and exchanging pleasantries. The gradual reduction in the number of buildings in EC3 that allowed unchecked entry to Lloyd’s passholders had exacerbated the problem.
The willingness of underwriters to trade from Lloyd’s Underwriting Room was also a point of contention for young brokers. The consensus was that, post-pandemic, underwriters are at the box on just Tuesday, Wednesday and Thursday mornings. While some insurers produce attendance rotas that are circulated to brokers on Sundays, the brokers’ experience was that these are often unfulfilled.
THE CLIENT EXPERIENCE MATTERS
Participants were reluctant to bring clients to visit the Room because of the lack of underwriters. One broker commented: “It is embarrassing if there are more underwriters in Leadenhall market than there are at the box”. Clients and producers, it was claimed, have begun to notice London’s changed working patterns. Several brokers cited instances when overseas contacts had made remarks about the lack of staff in the market on Fridays.
Jason Collins, who led the workshops and wrote the foreword to the report, said: “The message from young brokers is a stark one. They want to trade face-to-face; they want to build the relationships that would underpin that; and they want to do this in a Room restored to its position as a true trading floor where decisions are made.”
“The London market is a community and communities need a focal point – like a school or a church. In the London insurance market that focal point always has been and should be the Underwriting Room. A vibrant room attracts talent. It is an exciting, invigorating place to do business – and it fosters innovation.”
Chris Croft, LIIBA’s CEO, said: “Our workshops were a refreshing confirmation that our market is in safe hands. These young brokers are a group of natural-born traders thinking in depth about the way in which we can organise ourselves to continue to be the global centre of excellence for specialty insurance. Discussions that have set out a pathway to the marketplace of the future. It is time to get moving.”
In 2021, LIIBA published its 10 Key Principles For The Future of Trading in London, one of which was the need for continuing face-to-face trading.
Copies of Our Face-to-face Future can be downloaded from here.
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