As the relatively new Member of Parliament for the City, I have been finding my way around the incredible range of financial services which London offers the world – and insurance and reinsurance are definitely jewels in the crown. So, the publication of the third edition of the London Matters report this week was a great reminder of the world-leading position of this market which centres on the iconic Lloyd’s building in EC3.
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Key for me is the sheer size of the market. With a turnover of $110 bn dollars every year, it is larger than all its nearest competitors combined, a fantastic testimony to both its longevity and its ability to evolve as market needs change. And as well as size, there is reach. There is almost nowhere in the world that the London insurance market does not trade. As trading relationships around the world develop, this will be vitally important in a post-Brexit world.
It is logical that economies with more assets to insure should be amongst the largest customers for the London Market, and it was interesting to see the growth in North America, which is now (for the first time) its largest source of revenue. The combination of economic growth, the tech boom and also a huge landmass exposed to weather-related catastrophes shows why London is so important to North Americans for risk transfer.
Today’s business environment is a vivid reminder about dealing with the unknown, and London has an incredible track record of innovation to protect against new risks. Despite the challenging circumstances, London Market firms continue to pay out on average over US$100 million every week in claims payments including COVID-19, as well as providing expert advice and support, to help clients get back on their feet. For its clients, cashflow is critical and I know the London Market remains committed to commercial and individual policyholders as they face this unprecedented challenge.
After each of the previous London Matters reports, the re/insurance market has come together to discuss the findings and think about what it could do to improve. In 2014, the focus was on increasing efficiency through the adoption of digital tools. For a market that still values face to face trading and physical co-location, the current lockdown could have been an existential crisis. However, having created an electronic platform for placing risks, remote working has been possible. The market has been able support its trading partners and clients through the toughest of challenges, and contracts have been placed and renewed with legal certainty. The insurance industry’s support for the wider business community has never been more important. Insurance helps trade to flow and innovation to happen. As with all industries, the effects on market structure, products, processes and working practices caused by this crisis are likely to be profound and long-lasting. I am however confident that the strength of the market demonstrated by London Matters 2020 will serve its clients well in the months and years to come.