Writing a column such as this in December in a normal year follows an obvious standard convention. A look back over the year’s events to try to draw together common themes that shed a little light on proceedings. But I think I am not alone in having had far, far too much of 2020 already. So, with the optimism that we can take from the positive news around vaccines and the potential return to a more carefree existence, let us consign 2020 to the dustbin of history and look forward to what might be to come for our market.
The end of 2020 will also bring with it the end to the Brexit implementation period. Regardless of the outcome of the negotiations over our future trading relationship with the union – which, at time of writing, are still ongoing – any deal that might be concluded will not contain provision for financial services. And the Insurance Distribution Directive contains no regulatory equivalence provisions that might have granted market access.
Although stark, this position had the benefit of clarity – deal or no deal were always indistinguishable from our point of view. So, our members have done what they do best – sorted things out for themselves and now we have around 45 brokers with subsidiaries in the EU that branch back to the UK to provide services to continental clients. This has not been straightforward work, has involved dizzying levels of detail to get it right and has not been cheap either. But, aided, of course, by spectacular support from their excellent trade association, our members that wish to carry on and grow their EU businesses are well prepared.
And it is that second word – grow - that I think showcases one of the interesting possible outcomes of our Brexit work. Currently only about 10% of London market business comes from the EU. But now 45 of them have had to invest in expensive EU operations in order to be able to continue to service clients. And they will want to see a return on that investment. So, my theory is that this will ensure a renewed focus on these markets and that 2021 will see the start of increased insurance trade with Europe.
International trade will be more efficient and effective as we continue the digitalisation process that COVID-19 restrictions have accelerated. This is particularly true at the front-end of our market – our electronic trading capabilities. Comfortably over 90% of London placements now happen on a trading platform. We have achieved the necessary foundation for digitalisation – everybody is now using computers. The new version of PPL which you will see next year will deliver a quantum leap in its capabilities. It will make delivering the right insurance solutions to our global client base ever quicker, cheaper and better. And PPL is not alone. Whitespace also is an increasingly impressive offering – as anybody that has seen its new video conferencing capability will attest. The sophisticated centre for global insurance now has the sophisticated technology to support it that it deserves. The possibilities are enormous.
2021 must also be the year we repair the tarnished image of our industry. The behaviour of some insurers over COVID and business interruption has not played well in the court of public opinion. We have to find a way to reveal our better side. And we have a phenomenal opportunity. Already I am hearing about proposed solutions to insuring the delivery of COVID-19 vaccines around the world – building on the cover we provided to the research programmes that got us to this point. And of plans to use the insurance industry’s distribution expertise to support this delivery – especially into emerging markets. That really highlights the immense social good insurance can provide. We need to celebrate this to ensure we begin to rebuild some faith among our customers that we deserve to exist.
So, good riddance 2020 and let’s look forward to a promising future. 2021 has a lot going for it. And who knows, maybe we can even look forward to meeting up with people or, perish the thought, travelling again? In the meantime, stay safe.
