In the first of a new series of blogs, Jamie Althorp, head of Accenture’s London Market and Specialty Practice, explains why participants need to take action now to safeguard the pre-eminence of the world’s largest market for commercial and specialty risk.
At first sight, all’s well in the London Market. Gross written premiums are continuing to rise and, for the moment, there are few indicators that London’s dominance in commercial and specialty risk is under threat. But closer inspection reveals a very different picture.
Despite progress in some areas, London is failing to develop enough new products for the emerging markets. Share of business in this critical segment (the primary driver for future growth) slumped by over 20% between 2010 and 2013, and there’s no sign of improvement.
And this is just one of many storm clouds on the horizon. London is losing share in reinsurance. Customers are buying insurance in their local markets. Expense ratios are too high. Intensifying regulation is pushing costs upwards. A talent gap is looming. New technologies are dismantling barriers to entry for disruptive new competitors…the list goes on.
Highlighted in our recent London Matters – So What Next? paper we believe that there is broad agreement among participants that change is needed, however there’s little consensus on what form this should take – or when it should happen.
Such indecision could prove very costly. We believe a tipping point has been reached: quite simply, if today’s steady decline continues unchecked, within 15-25 years London will lack the economies of scale demanded by carriers. That ‘point of no return’ would trigger an uncontrolled tailspin – and a 327 year-old market would become redundant.
We believe rapid and decisive action is needed to safeguard London’s future as the undisputed global hub for specialty risk. And the London Market Group is best placed to provide the leadership needed for all participants to unite behind this critical transformation.
In upcoming blogs, I’ll be showcasing what we’ve identified as priority actions from now on. Here’s a taster:
- Bringing the value proposition into focus – it’s time for the London Market to eliminate the ‘blur’ and articulate a value proposition that meets the needs of all its customers.
- Building a future for Lloyd’s based on innovation – Lloyd’s has some unique features that make it particularly suited to becoming an innovation hub. What are they and how can they be harnessed?
The LMG’s London Matters report was a major wake-up call for everyone who contributes to and benefits from the London Market. Now let’s work together to make sure London still matters in the years to come. Thanks for reading.
To learn more about Accenture’s perspective on the actions required to secure the future of the London Market, read London Matters: So What Next? http://www.accenture.com/gb-en/Pages/insight-insurance-london-matters-what-next.aspx