UPFRONT
NEWS ANALYSIS
Change comes to Lloyd’s In the midst of the many challenges that have plagued the London market, will a new modernization strategy at Lloyd’s help to revitalize the global center of insurance?
LONG REGARDED as the center of the world’s insurance market, London has been hit with its fair share of challenges in recent years. From customers turning to local and emerging markets for insurance and reinsurance solutions, to a looming talent gap that has hit insurance companies in many parts of the world, experts have been warning about the threats to London’s position as the go-to global market for specialty commercial insurance for several years. “What people are concerned about is the fact that firstly, the share of the global insurance market that comes to London is declining,” says Jamie Althorp, managing director for Accenture Financial Services
Low interest rates have also become the new normal, which is impacting insurance business in many regions, but certainly in London, where insurers can’t make the same returns on investments as they once did. Yet in spite of these and other challenges, the market continues to have a lot going for it. “London is still a very vibrant insurance market, and that will remain for the time to come because it’s got that reputation, and ultimately, insurance is about trust,” Althorp says. “You have to trust that the organization you’re insuring with is going to be able to pay in the event of a claim, and London and Lloyd’s provide that trust. Most importantly, you’ve got a critical mass of talent here –
“London is still a very vibrant insurance market, and that will remain for the time to come” Jamie Althorp, Accenture Financial Services and leader of the company’s London markets and specialty practice. “The global insurance market is growing quicker than the London insurance market, and that would therefore suggest that there’s a high proportion of insurance that is being written outside of London.”
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brokers, underwriters, lawyers and various experts that you need to make a market work. The concern is that those things will erode over time.” The focus on cutting costs hasn’t made brokers’ jobs any easier. There’s been a lot of emphasis on trying to reduce costs
within insurance organizations as they strive for efficiency, and that’s been the case for brokers and underwriters as well. The pace of mergers and acquisitions is likewise putting pressure on everyone in the global insurance value chain. According to Clyde & Co.’s Insurance Growth Report, the first half of 2019 saw 222 completed M&A deals worldwide, up from 196 in the second half of 2018. That represents a 13% increase in the volume of transactions – the highest since the first half of 2015. This challenging environment has taken its toll on Lloyd’s, but it’s responding to the obstacles head-on. In the midst of a tough year during which it reported a pre-tax loss of £1 billion for 2018 and made headlines for a boys’ club culture punctuated by harassment, Lloyd’s unveiled what it called “a bold new strategy” aimed at transforming the centuries-old exchange’s future. The Future
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27/09/2019 5:13:50 AM