London’s dominance in global insurance market crumbling
Brokers and insurers are building global models that will cause London to lose its privileged position as the world’s dominant insurance centre, says a report commissioned by the London Market Group (LMG).
This trend along with a range of other factors including growing emerging markets and technological change were threatening LMG’s ability to continue representing the 60 billion pounds-a-year sector, reports London’s Evening Standard.
LMG chairman Steve Hearn said London’s status had also come under threat from ‘illogical’ regulation prompted by the collapse of Lehman Brothers in 2008 which had lumped the sector in with banks and caused massive ‘frustration’ among insurers.
The LMG had commissioned the report, by business adviser Boston Consulting, in what’s been seen as an attempt to raise the insurance industry’s profile and end its ‘Cinderella’ status in the City.
London’s commercial insurance industry is more than twice the size of its nearest rival Bermuda and three times as big as Europe’s second centre Switzerland, the report says.
Hearn said the industry needed help from the Government to compete with new centres such as Singapore, which are servicing the fast-growing Asian economies.
The report estimates that as much as 40% of the premiums written in the London market are in danger of being captured by new local or regional hubs.
Hearn said other potential threats to London’s position included restrictions on immigration, because Britain’s universities alone could not supply enough high-calibre graduates.
The report warned: “Globalisation and technological change are affecting the commercial insurance industry as much as any other.
“Future growth in the industry will be driven by emerging markets, where London is less well represented and where regulators and insurance buyers have a preference for local underwriting.
“Brokers and insurers are responding by building global models that do not give London a privileged position. Other aspirant global hubs such as Singapore are competing for London’s business.”