What can the London market expect in terms of process and regulatory engagement in 2024?

From a rating perspective, across most classes the London market, both at Lloyd’s and in the company market, continues on an upwards trajectory at a time when the scale and scope of its risks continues to evolve, especially in the specialty sector. Yet rating is not the only barometer of success, as any underwriter worth their salt will tell you. For example, while the invasion of Ukraine – and more recently conflagration in the Middle East-  has led to risk-adjusted price increases in certain markets such as political violence, it has also reduced income for other accounts due to a cessation of Russian-exposed business.
Yet while some markets contract, others sprout and grow; such is the dynamic nature of (re)insurance. As brokers, underwriters and all those associated with the global world of (re)insurance will by now be very familiar with, new and emerging risks which the market is responding to are at the centre of the centre of current coverage issues: cyber insurance; the growing threat from geopolitical risks; and the increasing frequency and severity of losses associated with the impact of climate change are all huge risks which we all need to respond to more effectively in the immediate future.

These aren’t just esoteric existential threats for some far-flung future, they are very real risks which are impacting clients and the market as we speak. If we don’t as a collective market get it right in terms of exposure, appetite and pricing now, we are all going to suffer in years to come. Simply put, as the long-held centre of the global (re)insurance sector, many markets are looking to London for leadership in a time of a dynamic and fast changing risk environment.

Yet as important as these issues are, process reform is equally necessary if London is to maintain its competitive edge and remain relevant and responsive in this rapidly changing era. Internally the market is pushing ahead with its bold plans for process reform, as well as responses to climate change and continuing engagement with the regulatory authorities, as Claire McDonald, chair of the International Underwriting Association (IUA), tells Emerging Risks in answer to this week’s Big Question.

Ian Summers, Global Business Leader, AdvantageGo

Claire McDonald is taking over the position of chair of the International Underwriting Association (IUA) at a pivotal time for the London market. A member of the executive board for HDI Global SE, she has been a member of the IUA Board since 2021. Having served as deputy chair, she will assume the new role 1 January 2024.

The year ahead is seen to be twelve months in which the technological changes which have been outlined in the Blueprint 2 document will become reality, with broad sections of the market gearing up for further change. As an example, the Lloyd’s Market Association (LMA) recently released an updated managing agent Blueprint Two Playbook, which it said has been created to provide managing agents with the tools and knowledge required to implement the Blueprint Two market transformation initiatives.

McDonald agrees that process reform will be very much one of the key driving forces for next year.

“2024 will be an important year for the London Market on a number of different fronts,” she explains. “Not least will be one of the most significant ever technological upgrades to our central processing systems. New digital platforms for both premium and claims will further transform our sector, making it better, faster and cheaper for all participants.”

However there is much more on London’s agenda for 2024, she adds. For McDonald there are a number of key issues to be addressed, as away from the efforts to transform the way business in transacted and processed, the market will also be looking at the impact of external forces.

“Regulatory developments are as prominent as ever but in the year ahead we can look forward to UK authorities publishing detailed metrics for regulatory performance,” adds McDonald.

“These have been the subject of much promotion by the IUA and the London Market Group and are intended to help ensure rules remain proportionate and appropriate for the business they govern”.

Looking to London, and the industry’s wider role in the global risk market, McDonald says the results of the recent United Nation’s COP28 climate summit in Dubai and the agreed statement that has signalled a determined transition away from fossil fuels will see underwriters asked to play a significant part in aiding the world’s transition to net zero. It will also provide the opportunity for London to show its worth, she suggests:

“Our industry, and the London Market in particular, has a huge role to play as the world transitions to net zero emissions. For all sorts of green projects insurance is an essential partner – from the conception of an idea and securing financing to construction, operations and, where necessary dismantling or re-purposing. IUA members have vast experience in managing risks across diverse environments and are ideally placed to support sustainability objectives in every way.”

While the IUA continues to provide a single voice for the London company market with regulators  and markets across the world, it is also keen to build on the growth that the company market has undergone in recent years.

As such, there are a number of targets McDonald has set for the coming 12 months.

“The IUA is currently preparing its business plan for 2024 and this will be published to members with a comprehensive list of targets for the year,” she explains. “These will cover three overarching strategic objectives: transforming business processes by driving a modernising agenda of digitisation and automation; delivering knowledge and expertise for innovative underwriting and claims handling and representing members on matters of public policy and regulation.”