London market is failing to capture emerging markets
London market is at a tipping point as it fails to capture opportunities in emerging markets, a new report has claimed.
This is according to London Market Group (LMG) and The Boston Consulting Group latest research into commercial insurance and reinsurance.
Its analysis revealed that London is only tracking global growth in commercial insurance, while it is losing its share in reinsurance: London's share declined from 15 per cent to 13 per cent between 2010 and 2013.
The market is heavily reliant on the UK, US, Australia and Canadian markets with only 0.5 per cent of the absolute growth in emerging market premiums in markets such as Latin America, Asia and Africa, was placed in London.
“Its share of the Asian insurance market, for example, is currently just 2 per cent. More than half of future growth will come from emerging markets, meaning that London's global leadership will become increasingly challenged,” said the report.
The London Market reached £60 billion of gross written premium in 2013, with £45 billion of this written in London and backed by London capital. The study shows that, based on business written in London alone, the market (£45 billion) is nearly double the size of Bermuda (£25 billion) and Zurich (£19 billion) and 11 times bigger than Singapore (£4 billion).
Steve Hearn, chairman of LMG and deputy chief executive officer of Willis Group, said: "The findings of this research tell a clear story: the London insurance market matters. But London cannot rely on its historic advantages to guarantee its future growth. As a collective, the market must react with speed to the global competition, respond with new innovative products and reinforce the message that London is the best place in the world to underwrite complex commercial risks.
“For the first time, we have a complete picture of the economic contribution of the London Market. Government and regulators need to take note and understand our challenges and play their part in helping us to capture our opportunities. We need the right culture and environment to ensure that London continues to be the global centre of innovation and expertise – think the Silicon Valley of the insurance world."
