Latest London Matters report: challenges remain

On 9th May, the London Market Group (LMG) published London Matters 2017 - an update of the fact base around London’s position in the global insurance industry between 2013 and 2015.

The original report, published in 2014, laid out some of the longer-term challenges facing the market: increased competition, markets with lower transactional costs and lighter-touch regulation, the lack of ties between London and emerging economies and the need to attract the next generation of market professionals. In September, 2016, the LMG Manifesto laid out a comprehensive, business-led response to those challenges – with four interdependent workstreams, one of which is the London Market Target Operating Model.

Traditional strengths

While several positive trends affirm the traditional strengths of the London Market, the data reveals the Market still faces significant challenges, particularly in reinsurance, emerging markets and diversity.

The 2017 findings revealed that London’s global reinsurance premiums declined, from 13.4% in 2013 to 12.3% in 2015, continuing the trend reported in the 2014 London Matters report which estimated a 15% share in 2010.

Emerging markets

London premiums from emerging markets (Asia, South and Central America and Africa) declined from US$10.5bn in 2013 to US$9.3bn in 2015. Asia remains the highest growth market globally, but was also the region in which London lost most ground between 2013 and 2015.

The 2017 report reveals that diversity continues to remain a challenge. While the proportion of female staff at 41% is in line with the UK average, the proportion of female executive directors at 5% in 2015 remains very low in comparison to the FTSE 100 average of 21%.

Global share

London’s global share of commercial insurance premiums remains steady at 5.8%, and the market has grown its position in established markets such as North American and the UK and gained share in its traditional heartlands of specialist risk classes. It has also demonstrated its ability to innovate with an estimated 74% p.a. growth in cyber premiums from 2013 to 2015.

Overall the market remains the largest global centre for commercial and specialty risk and continues to be a significant contributor to UK and London GDP. The market’s direct contribution to the UK economy is estimated at 0.9% of GDP in 2015 and accounts for 26% of the contribution of ‘the City’.

The full report is available here: London Matters 2017.