Swimming in a big pond
Businesses that place their insurance in the London market – and these include the majority of large ports groups in addition to many smaller facilities – may be comforted to learn that they are swimming in a very large pool.
A statistical survey has just shown that the London insurance and reinsurance market is significantly bigger than previously estimated. For 2010, the grand total in premiums after acquisition costs such as brokerage is put at close to £30bn.
Lloyd’s, thanks to its closeness to the operations under its umbrella, keeps an accurate record of its net premium total, which last year was £17.5bn, but the non-Lloyd’s market has until recently had to make an educated guess as to the equivalent contribution of its diverse London company membership. The International Underwriting Association previously evaluated its company market sector at £10bn, but reliable data it has just collected points to a more impressive figure of £12.6bn.
What interest should the size of markets be to clients such as port and terminal operators, and their brokers? Although, as we are constantly reminded, size is not everything, in this case it should indicate that it attracts the expertise essential for skilled underwriting and the handling of claims for technical enterprises such as port operations. It allows for benchmarking, and for greater ease of syndicating a risk when desirable.
Dave Matcham, the IUA chief executive, says that no-one should forget the many occasions when London provides the intellectual input for risks which in the end are written in a company’s parent office overseas, or elsewhere. He says the IUA survey has confirmed the speciality nature of the London company market, where for instance it collects £1.9bn annually in marine premiums.
Despite intense competition, London is holding on to its lead in marine – and half of such business comes from clients outside the UK and European Union. Marine provides 12% of London company market premium, whereas the comparable figure at Lloyd’s is 13%.
Of course there is more to London than the composite insurers and Lloyd’s syndicates. In ports and terminals, the mutual TT Club plays a key role, as do insurers in Europe and the US, and those in other jurisdictions are increasingly active.
As to premium volume, there is much pressure for it to continue rising, especially at the expense of clients with mediocre accident records. Claims levels and loss ratios are increasing markedly for many big insurers.
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