We are in somewhat challenging times for the London insurance market.
Last year, Lloyd’s posted its first loss in six years, with CEO Inga Beale describing it as an “exceptionally difficult year,” driven by challenging market conditions and a significant impact from natural catastrophes.
But even aside from its burdensome year of nat-cat troubles, the market faces wider hurdles – including the uphill struggle for modernisation and continuing worries over Brexit.
According to AFL Insurance Brokers chief executive Bob Finch, emerging markets could be the key to unlocking growth opportunities in the face of adversity.
“Emerging markets represent a large area of uninsured risks that the London Market, with its problem-solving background, should be finding solutions for,” Finch told Insurance Business.
In recent years, the London market hasn’t been doing so well when it comes to harnessing the potential of emerging markets: the London Matters 2017 report, produced by the London Market Group and Boston Consulting Group, found that the volume of London business from emerging markets had decreased, despite growth in insurance business within these regions.
AFL, an independent Lloyd’s broker, has its eyes squarely focused on emerging territories. Earlier this month, the firm announced that it had been selected as the insurance partner for Trade SSA, a new digital trade platform designed to connect the UK private sector with opportunities in Africa. According to Finch, the platform was borne out of an opportunity that Africa saw to promote itself as a place of new trading opportunities following the UK’s Brexit vote.
While the London Market should “always be looking” at emerging markets and new ways of doing business, Brexit is acting as a further catalyst for it to broaden its horizons, says Finch.
“Brexit is adding a layer of uncertainty in some regards and making it more important than ever to have a diversified book of business, both in terms of sector and geography,” the chief executive said.
For brokers and syndicates who may remain unconvinced by the prospect of tapping into previously unexplored and undeveloped markets, put simply there is a potential for new revenue streams, says Finch.
That could be a welcome lifeline for those feeling the pressure of today’s market conditions. In recent months, underperforming syndicates have been threatened with closure should they not return to profitability.
For the London market as a whole, looking to new opportunities is fast becoming an imperative.
“This market cannot continue to tap the finite pool of existing lines of business in established, mature geographies, without seeing a lower and lower market share each year,” said Finch. “Innovation is key to remaining competitive and to growing as a market; innovation in cross-border trade, in new geographies and in designing relevant products.”
