Caroline Wagstaff, CEO of the London Market Group, which represents the City’s specialist insurance sector, points out that London’s share of the global insurance market is “flat”, hovering around 8% in recent years. old times, the Financial Times reported.
The London insurance market, centered around Lloyd’s of London, faces challenges due to slow regulators and insufficient regulations, according to an industry estimate. The sector, known for insuring and resetting major and unconventional risks such as energy infrastructure and cyber threats, contributes almost a quarter of the City’s economic output.
One of the main concerns raised by Wagstaff is “one-size-fits-all” regulation that treats all insurance buyers equally, regardless of their complexity or complexity. This approach creates unnecessary administrative burdens, Ian Smith from Financial Times reported.
Another issue is the slow pace of regulatory approvals, which is a problem across the financial sector. Financial managers often fail to meet the statutory requirements for processing applications and approving key executives within companies.
Recognizing the need for change, the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority are set to receive new secondary objectives aimed at accelerating competition and economic growth.
The UK government has also started a consultation on the performance metrics and information that regulators should publish in relation to their new objectives.
The London Market Group urged regulators to provide a comparative analysis of the UK’s performance compared to other financial jurisdictions, including approval rates, application processing times, and rejection rates.
To address the slipping timetables, the group advocated for new metrics, such as assigning a case handler within five days of a new application. However, concerns remain that operational improvements may be too late for London to establish a strong presence in insurance-linked securities (ILS), a fast-growing segment of the industry. .
Wagstaff believes London’s attempt to challenge Singapore and Bermuda as an ILS hub has failed due to slow and cautious regulators. Singapore, in particular, attracted $700 million in investment that could have gone to London.
While efforts are being made to improve competition, one area that remains a concern is the development of regulatory frameworks for captive insurance companies. Some jurisdictions are leading in this area, creating favorable conditions for self-insured risks within a group of companies. The UK government has promised more work in this area.
Despite the challenges, the London insurance market is generally in good health due to rising insurance costs. Lloyd’s, in particular, expects premiums to rise from around £47 billion in 2022 to £56 billion this year.