There are two main challenges that preoccupy City firms: access to markets and access to talent. To be successful, companies need both the freedom to trade with the world openly and the ability to attract the world’s best talent. The upcoming Brexit negotiations could provide an opportunity to deliver on both.
Uncertain what the future holds in terms of trade across Europe, companies are already moving forward with their contingency plans to maintain business as usual. This is particularly important in highly regulated industries like insurance. In order to provide our products, we rely on licences from local regulators in every jurisdiction we operate in. Once the UK leaves the EU we lose those licences, meaning we can’t honour our customers, we can’t provide continued coverage and we can’t renew their policies. That’s why at Lloyd’s we are setting up an EU subsidiary in Brussels, which enables us to continue providing insurance for all our customers in the EU.
Because licenses are the lifeblood of our industry, getting the right access to a market is absolutely critical. We can thrive in high growth markets, like Latin America and Asia, provided we have access. Between 2010 and 2015, for example, the Lloyd’s insurance market grew in two of Latin America’s biggest growth markets, Mexico (by 28 per cent) and Colombia (by 24 per cent). Meanwhile, in China our Lloyd’s platform has expanded the amount of reinsurance business it writes by 20 per cent over the same period.
Improved access and links with international markets are imperative if City firms are to continue growing and supporting the UK economy. Worryingly though, there are signs, even before Brexit, that our ability to trade with other markets is getting worse – not better – due to the protectionist sentiment we see rising around the world.
New research from the London Market Group (LMG) shows that the London insurance market has enjoyed growth from mature markets such as the US but its share of insurance growth has declined in emerging market regions, despite these regions enjoying strong overall growth themselves. This decline is a real cause for concern, particularly when you consider that London’s insurance market employs 52,000 people and accounts for just over a quarter (26 per cent) of the City’s overall contribution to UK GDP.
If we’re going to turn this situation around we need better access to these fast growing markets.
The other key factor which ensures the continued success of City firms is the ability to attract the most talented individuals, no matter where they come from. Brexit and new immigration policies could make this much more difficult, particularly when it comes to grabbing the continent’s best talent or keeping hold of EU staff that we already employ.
This is an issue that’s even more important for the financial services industry; partly it’s because we have invested so much in technology that we need access to lots of tech-savvy people. Usually that means hiring young talent. But it’s also about hiring a diverse workforce, which represents not just the new markets where we are growing quickly but also the new skills that our businesses need to be successful in a digitally connected world.
That is why we are working very hard to tackle the problem, with our London Market Target Operating Model (TOM) programme, which seeks to improve among other things the flow of data and information across our industry. We want to make the London insurance market an easier, more cost-effective place to do business. Even so, we know that there’s still much work to be done.
Nowhere is this more pressing than in the realm of diversity. According to the same research from the LMG, 11 per cent of our employees are non-UK nationals. While we’ve made progress in increasing the representation of senior female executives, overall the share of female insurance workers in London has fallen from 43 to 41 per cent. And so much for attracting digital savvy, intelligent and innovative young people into our ranks, only 20 per cent of employees are less than 30 years old in our industry.
The facts speak for themselves. We need to do much better. Change is long overdue.
To effect real change, we need a government that understands these issues and won’t stand in the way. Businesses operating in the Lloyd’s marketplace underwrite risks or reinsure business for almost every other country in the world. And to maintain that huge global reach we need open access, and also a workforce that represents the diverse markets we do business in. After all, these are the factors that have made Lloyd’s, and the City as a whole, so strong.
Whoever is left in charge after the General Election will face the immense task of unravelling Britain’s relationship with the EU and redefining her place in the world. I do not underestimate that challenge. But, in the City, we ask the government for reassurance that access to talent and wide ranging trade deals with fast growing economies will be top priorities.
Lloyd’s is a historic City institution, a symbol of Britain’s openness and of London’s ability to attract the world’s best talent. For hundreds of years people looking to protect their assets have turned to London and to Lloyd’s for solutions. If the government delivers access to markets and access to talent, it will ensure the next hundred years will be defined by growth and opportunity.