Market Group reveals plan to tackle emerging risks, innovation and relevance

The London Market Group (LMG), which represents London’s underwriting and broking community has announced that it will create a single electronic placement service by the end of this year, choose a partner to help promote the market and boost demand, particularly in emerging markets, and identify where it needs to plug skills gaps.

The new strategy has been formulated in response to the London Matters: The Competitive Position of The London Insurance Market report that was carried out by the LMG and The Boston Consulting Group (BCG). It was based on over 300 interviews with customers and market participants around the globe.

The report analysed the current status and future prospects of the market and concluded that London’s position as the undisputed global hub for commercial insurance is under threat. The London market is currently the largest global hub for commercial and specialty risk. It generated £60bn of gross written premium in 2013. Some £45bn of this was written in London and backed by London capital.

The study showed that even at £45bn the market is nearly double the size of Bermuda (£25bn) and Zurich (£19bn) and 11 times bigger than Singapore (£4bn).

But the market is at a ‘tipping point’ warned LMG and BCG. The analysis revealed that London is only tracking global growth in commercial insurance, while losing its share in reinsurance. London’s market share fell from 15 percent to 13 percent between 2010 and 2013.

The report also found that London, heavily reliant on the UK, US, Australia and Canada for sales, is failing to capture emerging market opportunity.

The LMG reported that only 0.5 percent of absolute growth in emerging market premiums in markets such as Latin America, Asia and Africa was placed in London. The market’s share of the Asian insurance market, for example, is currently just 2 percent.

“More than half of future growth will come from emerging markets, meaning that London’s global leadership will become increasingly challenged,” stated the LMG.

To help rise to these challenges and see through the new programme announced this week, LMG chairman Steve Hearn said that he would remain in his post until the end of next year, despite the tradition of stepping down after two years.

This is because the LMG’s ‘ambitious programme’ will require strong continuity of leadership, Hearn, who is also chairman of the London & International Insurance Brokers Association and deputy CEO at Willis, said.

“Traditionally chairmanship of LMG has been a two year assignment which would mean I would step down at the end of the year. However, London Matters has set up a rather compelling plot line and I would like to see that through to the end,” said Hearn.

“So I am delighted to announce that, with the full support and backing of all the constituencies around the LMG table…I have agreed to stay on for another year. We are a long way down the track, but nowhere near where we need to be. The LMG is a cohesive and collaborative expression of market consensus, and we have a plan-I am looking forward to playing my part in delivering that plan,” he added.