It has been a full-on year in the world of insurance intermediation. The regulatory agenda has never been fuller. Our major trading partner has embarked on a radical programme of change. We have been fundamentally adapting the way business gets done in our market. We have had the challenges of Brexit. And, in between all that, LIIBA members have had to weave in some work to actually serve their clients and make some money - and we have been trying to help broaden the scope of their opportunities.
The year began in slightly daunting fashion. I have written here before about the seismic week in February when we faced the publication of the European Insurance and Occupational Pensions Authority’s (EIOPA) Brexit recommendations the day before the release of an update on the Financial Conduct Authority’s (FCA) Wholesale Insurance Broker Market Study. Either had the potential to significantly impact broking businesses in London.
And indeed both have, but perhaps not in the way we feared. The EIOPA work confirmed a number of things. It reiterated that decisions about acceptable “no-deal” Brexit models were down to the individual regulators in the EU. But it confirmed that the scope of the Insurance Distribution Directive was limited to EU policyholders seeking to insure EU risks. And it restated that any intermediary working on such a contract, regardless of its position in the distribution chain, would need to be registered. That has given birth to a new phrase - “back branching” - which is now familiar to many of us who spend more time than they ever wished in the minutiae of our possible future relationship with EU. Now, to work on EU policyholder/EU risk business, London brokers need a subsidiary in the EU that has a branch here. It is the only acceptable, post no-deal Brexit model. But at least there is an acceptable model to allow brokers to carry on servicing EU clients.
While at the conceptual level back branching makes sense, in each individual firm’s context there is always something a little bit different. We have been helping work through layers and layers of detail as plans have progressed. I never thought I would become a relative expert on such things as the recognition of insurance qualification equivalence in Belgium; or spend so much time in Frankfurt. But those are the joys that Brexit has brought us.
Then came the wholesale study. For the first time ever, the FCA proceeded straight to a final report. It confirmed what we believed, that the wholesale broking market in London is fiercely competitive and delivers excellent results for its customers. Something confirmed by the consumer research published as an appendix to the report. This showcased sophisticated customers who understand the complexity of specialty insurance markets; understand the specialist expertise that they get access to by hiring a broker; are clear how and how much they pay their broker and consider it excellent value for money. It was a heartening message to get from one’s own regulator, and none of us should tire of repeating it.
Then in May and September we have had two stanzas of Future at Lloyd’s. Bold new initiatives to try and ensure Lloyd’s remains a relevant and vibrant part of the global insurance market. It is something brokers want as an option for their clients and we have welcomed the ambition and general direction of the programme. And we are keenly engaged in the work to develop the necessary detail.
All that and we haven’t even got to the major overhaul of company structure that is Senior Managers and Certification Regime (SMCR) which gets going on December 09. Or the Treasury’s call for evidence on the structure of UK financial services regulation. Hardly unimportant, nor insubstantial matters. And, all the time we have been supporting members in their adoption of electronic trading. Work that has seen over 100,000 risks placed across the various platforms that are available.
While reacting to “events, dear boy” is vital, you need to trade to thrive. So, we contributed a LIIBA paper via the London Market Group to provide suggestions for improving insurance trade with Brazil. This will inform a trade delegation led by the Chancellor – once we know who that is. We have also developed a relationship with ProColombia, the entity that exists to promote trade with that growing economy.
So, a big year. And hopefully a successful one. Certainly, our membership has grown, both in size and, with the onboarding of our first Australian member, geographical spread. Hectic but quite fun. Let’s hope the same can be said for 2020.