UK government embraces London Market reform25th August 2015
The government has “sat up and taken notice” of the competitive dangers faced by the London Market says LMG.
The government recognises that insurance is a mobile business and the danger of business going to other international insurance centres is very real,” Croft tells Hiscox Global Insight.
If we are going to maintain London as the global centre of excellence for specialty business then we need to be good at innovation.
Attracting ILS business to London
Good progress has been made in forging a relationship between government and the London insurance industry, Croft believes, following publication of the London Matters report last year. “We’ve created a task force to work with the Treasury and also the Prudential Regulation Authority and the Financial Conduct Authority on changes to corporate legislation, tax and regulatory frameworks that might attract more insurance-linked securities (ILS) business to London. If we are going to maintain London as the global centre of excellence for specialty business then we need to be good at innovation.”
The Treasury is taking the task force’s work very seriously,” says Croft. “We are likely to have a set of proposals that will go into the Chancellor’s autumn statement this year on changes that will make us more competitive with Bermuda and Guernsey, where much of that business currently takes place.”
We’ve made significant progress on market infrastructure.
Market infrastructure makes progress
Croft is also positive about developments on the other initiatives recommended by the London Matters report for London if it is to maintain its leading international role. “We’ve made significant progress on market infrastructure, for example, and we’re creating a target operating model for the way business is processed. Towards the end of September, we’ll have identified the key initiatives that we’ll take forward, which will be on areas like electronic placing and more improvements to the way in which the central services deal with accounting and settlement.”
Work is also progressing on how to promote the London Market in emerging markets where insurance demand is growing, as well as how to develop talent and diversity, says Croft. “But it’s important to emphasise that these aren’t separate and distinct work streams. It’s a holistic response in recognition that each element supports each other.”
We have begun a process by which London is beginning to understand its role in a global industry.
A positive impact
Since the release of London Matters, Croft is optimistic that support for the reform identified in the report has become widespread throughout the market: “The report has been very well received and people recognise it’s an opportunity for London. We have begun a process by which London is beginning to understand its role in a global industry, and that there is something unique that London brings in terms of its concentration of expertise that you can’t find anywhere else.”
The London Market Group runs monthly forums in the Willis auditorium, open to anyone connected to the London Market. The next session, held on 24 September, will be a ‘state of the nation’ address from LMG chairman Steve Hearn. To register and also sign up to the LMG’s regular newsletters, go to www.londonmarketgroup.co.uk and follow the LMG on Twitter @londonlmg.
London should prioritise development of the distribution network
In the previous edition of HGI we asked you to vote on which of the six opportunities highlighted by the London Matters report you rated most highly. Just over a quarter (26%) voted for developing the distribution network to allow London to compete more effectively in high-growth markets.
The second highest priority at 21% was the need to leverage London’s reputation for innovation, while nearly a fifth (18%) saw investment in the strengths of the London Market, particularly to new, emerging markets as key. The same number of respondents also rated the need to reduce the costs of doing business as a priority.