How London insurance has reinvented itself over 25 years

London writes less business in-house than ever before. Simon Barder, from AM Specialty, explains why that’s a strength, not a weakness.

Few markets have changed as fundamentally as London since the turn of the millennium: capacity has ballooned, syndicate numbers have shrunk and underwriting has moved ever further from Lime Street. Today, decisions are likely to be made thousands of miles away through MGAs, quota shares and carefully constructed programmes that reflect a very different reality. Yet London’s influence over global risk has arguably never been greater.

Simon Barder, co-founder and chairman of AM Specialty Insurance Company (ASIC), has watched that transformation from multiple vantage points as a facultative underwriter, a reinsurance intermediary and carrier leader. Looking back, he told Intelligent Insurer that facultative placements were often a necessity rather than a preference. “The business was offered in a facultative format often because overseas markets did not have sufficient capacity to accept their larger domestic risks,” he recalled.

In 2000, when Barder was underwriting in the London Market, facultative business was still king. Capacity was fragmented, syndicates were small and London’s role was to step in where overseas markets could not absorb large domestic risks. Two-and-a-half decades later, the structure, scale and mechanics of the market look radically different.

Constraints gradually disappeared as global capacity expanded, and London played a central role in that expansion through quota share reinsurance and ceding the majority of the risk. Barder explained: “This worked, allowing the domestic overseas companies to retain small percentages of the business and collect sizeable overriding commissions from the balance of the ceded business.” Over time, similar structures were offered by European, American and Bermudan markets, fundamentally changing the flow of risk.

“Today, writing business through MGAs on a delegated basis is popular across the London Market.”

At the same time, London underwriters increasingly accessed overseas business. “Overseas business was written via binders – delegated authorities so that London underwriters could obtain shares in overseas business,” Barder said. The result was a clear shift in purpose: “The facultative business stayed at home and London turned to accepting overseas business via quota shares and programmes.”

The scale of the change is stark. In 1990 the market comprised around 400 syndicates, each with average capacity of less than £40m. Today, there are roughly 100 syndicates, each averaging closer to £500m. Typical risk shares have risen from 2.5% to 25%, while Lloyd’s overall capacity has grown from around £10bn to £65bn. Fewer participants now write far larger lines, altering underwriting behaviour.

That concentration has created its own challenges, particularly around understanding overseas portfolios. Barder was clear that writing quota shares from London without close contact with ceding companies was fraught with risk, yet London’s subscription model often masked that weakness, as “following syndicates would not need to undertake significant due diligence”.

Marine Re was formed to close that gap. Its model was built on direct engagement, with Barder emphasising that teams would “visit the reinsured and really get to grips with their local knowledge and expertise”. Only after that assessment had taken place, would capacity be offered with careful controls to “ensure that only best in class portfolios were reinsured”.  

Central to that approach was geography, and Barder said there was no substitute for having a physical presence in the US market to “best understand the portfolios to select”, citing the company’s enduring “boots on the ground” philosophy.

This thinking has carried through Marine Re, AM Re and now ASIC, where much of the legacy business continues to be written into the carrier. It also mirrors the broader rise of the MGA model; something London once resisted. In 2000, MGAs were viewed with suspicion. “They were often accused of only writing for income and therefore commission with little regard for the profitability of their portfolio,” Barder recalled, adding, “Such MGAs would not survive.”

London’s attitude changed as distribution eroded and underwriting moved closer to local markets. Delegation became a necessity rather than a risk. UK MGAs also emerged as cost-efficient platforms, attracting specialist talent and delivering profitable books. “Today, writing business through MGAs on a delegated basis is popular across the London market,” Barder said.

Compared with 25 years ago, he believes London is far closer to risk, despite writing less business in-house. “The short answer is much better,” he said, noting that the market once “did not trust MGAs”. What has surprised Barder most is the calibre of modern underwriters. Despite less direct facultative experience, “the expertise and knowledge of modern underwriters is excellent”, enabling them to “select the best MGAs or programmes to support”.

The evolution aligns closely with ASIC’s own strategy, and Barder said: “The philosophy adopted in 2000 was for direct facultative underwriters to adopt their skills to underwriting via delegation.” Today, ASIC applies that same logic by converting direct writers into quota share reinsurers and programme underwriters, while also “employing younger staff fresh out of college and training them in house.”

For Barder, London’s transformation is not a loss of identity, but a positive adaptation that reflects a market still capable of reshaping itself and remaining central to global insurance.

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