Is London the centre of the marine world?
We recently attended and exhibited at the Marine Insurance London conference, and after two years of virtual forums, it was slightly surreal to be back in person at an industry event. The venue was at full capacity, and it was an excellent opportunity to network and hear industry leaders discussing, debating, and offering actionable insights into the issues affecting the London marine sector.
The agenda was well structured and broad in its scope, with sessions on sustainability in marine insurance, the digital underwriting journey of war risk insurers, crew welfare, and a case study looking at the successful operation of the largest wreck removal in US history. There was a lot to keep delegates engaged and informed on the current state of the marine insurance market, and a blog could be written on each session.
However, it was the panel discussion – London: The Centre of the Marine World? – that caught our attention. As described in the agenda, for centuries, London has been the beating heart of the maritime world as communication, speed, and efficiency are critical, but is that true of the London market today? What are London´s USPs? To what extent is flexible working affecting the market, and has Brexit been a help or hindrance?
This blog would turn into a novella if we were to cover all of the points raised, so, instead, we will cover just the first question – Is London the centre of the marine world, yes or no? Moderator Julian Clark, Global Senior Partner, INCE Panellists spoke with panelists Richard Turner, President, International Union of Marine Insurance (IUMI); David Cox, Chief Executive Officer, MatthewsDaniel; Matt Roles, Head of Underwriting Performance, Lloyd’s of London; Iain Henstridge, Head of Hull, Apollo, and Underwriting Paul Greensmith, Head of Global Specialty, AIG.
So, is London still the central hub for marine insurance? Answering first, Richard Turner remarked, “Compared to where we were, not nearly so much, would be my answer.” Richard pointed out that in 2015, the global marine insurance industry was worth 30 billion dollars; last year, it was the same amount. London’s share of that in 2015 was 8.5 billion dollars (excluding P&I); however, that number dropped to 6.5 billion dollars in 2020. Richard mentioned that we need to be careful with these numbers because of cycle factors at play, but he believes that there are some structural things that London needs to pay attention to.
Richard added that London is addressing some of these issues, such as the cost base of the market being too high; but, compared to where we were, the strength and expertise of the market are not at the level it once was. Brexit is still a huge issue for the London market in terms of the efficiency of doing business. Despite this, Richard acknowledged that the London market has its strengths, and even though expertise is perhaps not, what it once was, there is still a strong cluster of expertise in the London market and a strong service capability.
Speaking next, David Cox agreed with Richard, adding, “My answer would be very much a yes, but, and the but really comes in from a sort of perspective of not resting on the laurels, not resting on the hundreds of years of history, but really, critically looking at what it means to be a marine centre, and innovation and the sort of practicalities of doing business are at the heart of that.”
Up next, Matt Roles emphasized that although he´s seen an improvement in underwriting performance, London must be alive to the changing world and cannot be indifferent to innovation, “We are definitely a big influencer in the London Market for sure…. But I don´t think we can afford to be complacent.” Matt added that there are disruptors who will start playing in certain parts of the marine market, and for London to remain relevant, the market must operate and react accordingly.
Iain Henstridge had an opposing view about comments made around talent and expertise being lost, “I disagree with the notion that the talent has been lost. I think we have an incredibly well educated workforce, far better than we had a generation ago. I think we´ve got incredible people coming through; we´ve got some really smart people, a diverse workforce coming through; they´re just not at that senior level yet, I think that will be another great thing for us to achieve… so I think London leads the way there.” Despite challenges faced by the London marine insurance market, Iain believes London still has a great story to tell.
Rounding up this question, Paul Greensmith pointed out two key advantages in the London market, “London is definitely the preeminent market for that large complex business because it´s got two big advantages to my mind – one is deep pools of expertise, so whether that´s claims or underwriting or engineering, legal, etc. And the second one is the capacity provided through the subscription marketplace; that is absolutely fundamental.”
Nevertheless, Paul added that much has changed in the last few years, with more options now available. Global brokers who are much bigger and much more effective at utilising their global placement models to find the best solution for their clients. Carriers also have other options, and most big insurance companies have a London marine presence with business in different jurisdictions around the world. Paul discussed how London needs to invest in its two big advantages: talent and not just traditional underwriting talent, but digital talent, and talent in technology. The second area is cost and whether the subscription market is efficient and as effective as it could be.