Podcasts
Why the London market matters
Caroline Wagstaff, CEO of the London Market Group, was the latest guest of the Voice of Insurance podcast.
The headlines stories are broadly positive for the London market in 2024, suggesting a global insurance and reinsurance hub that is enjoying the bounties of hard market pricing, underlying economic growth, and a risk landscape that plays to its core strengths for large corporates and emerging and intangible risks.
Gross written premium has surpassed $100bn, London’s market share has increased relative to global rivals to 8%, and employment figures have recovered from a Coronavirus dip to reach “record numbers” of more than 60,000 people.
All of this was highlighted by Caroline Wagstaff in the latest Voice of Insurance episode. The CEO of the London Market Group (LMG) appeared on the podcast, published in association with AdvantageGo, to promote the release of its latest “London Matters” piece of research (link at the bottom of the page).
“The fact is that we contribute nearly a third of the city’s GDP now,” Wagstaff said.
More than that, she emphasised that specialty insurance is one of the few financial services communities that is still physically present within the City of London – dominating the EC3 postcode – whereas industries, such as banking and investment fund managers, have largely decamped to Canary Wharf or Mayfair, respectively.
“I think that’s really important for the market, the fact that we are still an ecosystem. I always say to people that we’re an insurance village, and it’s great that we’re physically still here,” she said.
Part of the Wagstaff’s LMG’s lobbying mandate, Westminster is a short hop on the tube, and politicians these days are more aware of ‘what the specialty insurance market does’, she suggested, beyond the well-worn cliches such as insuring performers’ legs or voices. This builds on the work of her forebears, such as Steve Hearn, but has perhaps reached new heights as the UK prepares for the general election on 4th July.
“In tactical terms, I personally emailed, I think, 35 parliamentarians…with the report and our plan for the future and what it is we need government to do to support the London market, to reinforce our position as the global centre of risk transfer,” she said.
Much of this is evolution, not revolution, she emphasised, and is geared towards an appropriate regulatory environment. She noted “constructive discussions” with UK regulators, representing both their market safety and consumer protection roles.
“Not all consumers are equal, as George Orwell might have said,” Wagstaff remarked. “We need a regulatory environment which allows the market to thrive, and that is all about proportionality. It means that the regulators recognise that we’re a wholesale market, not a retail market. That means our policyholders are different, and maybe don’t need the same levels of protection as a retail consumer.”
Most of those policyholders are in the US or around the globe, anyway, she noted, beyond the writ of UK consumer protection, and subject to their own local regulations.
Another aspect to proportionality that Wagstaff highlighted related to risk transfer solutions that in some cases are more established elsewhere around the world, even if they’re new to the UK, meaning insurance shouldn’t be treated as though it were trading in crypto-currencies.
There are “ongoing discussions about ILS and captives”, Wagstaff revealed.
“What are the types of risks that we’re writing, and what risks do they pose systemically?” she said. “If you’re talking about something like a captive insurance company, and as you know, we’ve been lobbying for the introduction of a UK captive regime, then this is not a new risk transfer product…I think we need more proportionality in understanding what I call ‘new, new risks’, or ‘new, new solutions’ [relative] to those that are well established but just not in the UK.”
Approvals processing and staffing levels at the regulator also need to play their part, she acknowledged, calling this “the business as usual model”. This has included suggesting “metrics for success” that the UK Treasury might use for things like approvals to provide more measurable outcomes.
Wagstaff added: “We need them to be doing their day job as efficiently and as effectively as possible, because those are the things that when people make choices about where they bring business, where they bring capital, and where they bring people, those are really important parts of the decision-making process.”
The Latest London Matters report can be found here: London Matters 2024
