Boom time for outsourcing in London
As investment margins have tightened in recent years and with rates stagnating and reserves running low, one beneficiary of this squeeze on insurers have been insurance outsourcing specialists, especially in the London Market where business is booming.
That is the view of Stephen Card, chief executive at Charles Taylor Insurance Services – a provider of outsourced services to the Lloyd’s, London and global insurance markets. He said the outsourcing of claims management and underwriting support has increased exponentially in the London Market in recent years.
“The market is changing and we have definitely experienced an increase in demand for both claims and underwriting support,” said Card.
He estimates that as much as a third of Lloyds’ income comes from delegated underwriting (MGA) activities and the demand for outsourced services from this market has grown rapidly over the last 18 months.
“Underwriting support is now big business,” said Card. “Dealing with data is now, due to Solvency II, a big problem for the UK and US. Everyone is trying to get their arms around the reams of data and some people are all over the place.”
But he adds that claims management has been the biggest growth area for his firm. “There is a lot of emphasis on performance nowadays. Once a claim has been settled, it’s easier for a company to hand it over to a shared service and not have to worry about it.”
According to Card, Lloyd’s has always focused on outsourcing. “Nearly all Lloyd’s Syndicates delegate work to external parties; we work with 32 out of the 52 Lloyd’s Syndicates and manage 80% of static claims in the Lloyd’s market.”
And Card believes that the outsourcing sector will continue to grow. “The options that outsourcing offers will continue to drive the market forwards, attracting more business at least for the next few years,” he added. “I don’t see it taking over, but it will definitely continue to grow.”
