Collaboration is key if London market is to compete in increasingly global market
Like most of us in the market, I read the recent London Market Group’s (LMG) report on the competitive position of London with great interest. The report highlighted the challenges the market faces, challenges which, if effectively addressed, offer huge opportunities for increased international expansion and operational efficiency.
If London is to build competitive advantage, it needs to focus on two key areas, firstly to actively develop products and solutions that address the needs of emerging markets and secondly to deal with the pressure that alternative capital brings. Both issues will only be fully addressed, however, if the market’s operations and cost effectiveness is improved.
The LMG report highlighted the urgency of this task – revealing that London market expense ratios are nine points higher than its competitor peer group.
To date the market has looked to its unique entrepreneurial culture to meet any new challenge and, while I believe this should remain at the heart of the response to competition, it also needs to be complemented by collaboration across the market to deliver the significant operational changes that are needed.
The rise of regional insurance hubs is a growing reality. Singapore already has a market size of £4 billion and a growth rate of nearly three times that of London. London needs to become an increasing part of the process and help other hubs to emerge where they are needed, most notably in Dubai and Latin America and also actively engage with African insurance entrepreneurs too.
Singapore provides a successful model of how hubs can be effectively created to deliver new opportunities rather than squeezing existing business. Capita is pleased to have worked closely with Lloyd’s and the service companies in Singapore to develop a solution that will make the market’s transaction processes more effective and the costs of doing business significantly smaller.
The success of this on going and evolving project is based on a new and collaborative approach to doing business which has seen the Lloyd’s Singapore service companies cooperate, and work together to establish a responsive bottom up process which delivers for the entire market.
In the past, London businesses have shied away from collaboration over fears of losing market share or clients, this was particularly so amongst the broker community. My sense today is that the scale of the challenge makes the market ready to consider working together and I expect to see many market wide initiatives to deliver transformational change in the coming years.
Whilst the threat from external competition, be it international hubs or alternative capital, is real this market has survived many predictions of its demise and its own suicide attempt in the early 1990s, to come back stronger and more profitable than ever before. To meet today’s challenges the need for cooperation has never been more important, if the London market is to deliver a stable and secure future.
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