In the second of a new series of blogs, Jamie Althorp, head of Accenture’s London Market & Specialty Practice, argues that it’s time for London Market participants to eliminate the ‘blur’ and articulate a value proposition that meets the needs of all its customers.
We believe participants in the London Market face a stark choice: act now and act together to safeguard London’s global dominance in commercial and specialty risk, or ignore industry trends and face insignificance within 15 to 25 years. But before anything can happen, the market needs a clear and compelling vision for the future – a vision that all participants can buy into and unite behind. This is key to building the momentum for change that’s now so essential.
What’s urgently required to drive London’s vision for the future is a clear and compelling value proposition. Current value propositions are blurred and indistinct – largely because of the hazy collective ethos that all insurance business globally should be within London’s remit. Rather, we believe, London should be turning its attention to how it can create individual value that meets the differing needs of the customers and risk segments it serves.
So how to achieve this focus? We suggest a number of priorities. First, start questioning commonly accepted views and beliefs. Should London really be banking so heavily on possessing an alchemical mix of knowledge and qualities that no other market can hope to replicate? The evidence suggests otherwise.
Next, to help participants better understand their role within the London Market (and how they can play to their strengths from now on), it’s important to find new a way of conceptualising the marketplace. We suggest viewing the insurance market as a commodity cone (see below).
This stratifies insurance products and risks into three classes of maturity. To date, London has succeeded largely by placing products/risks in the top of the cone – and preventing them from reaching the bottom. Of course, over time, this downward trajectory is inevitable and simple market economics will pull products/risks into the Commodity layer.
Looking at the London Market this way underlines the need to re-establish innovation as a core component of the value proposition – and to secure its position in the Emerging and Maturing layers of the cone. Other elements will also come in to play. How can London’s enormous strengths in jurisdiction and regulatory expertise be turned into powerful competitive differentiators (and prevented from becoming expensive regulatory burdens)? And what price an open and fluid marketplace? Could there be value in promoting a seamless transition of business across the London Market with, say, business being able to migrate freely between Lloyd’s and the Companies markets and/or from the Subscription to the 100% market?
The cone provides an entry point for thinking about and ultimately redefining the value proposition for the London Market. It turns a spotlight on innovation, and the urgent need for London to differentiate itself as a product innovator from now on. In my next blog, I’ll be arguing for Lloyd’s to take a lead role in that process.
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?