London will score two out of three on critical success factors for 2019.
Currently the London market delivers around 26% of the City’s GDP. Will Brexit undermine that - or it could be just the spur the market needs to embrace the new world, new ways of working and new technology to secure its growth for the next 300 years?
We believe there will be three critical success factors for the market in 2019:
1 - international growth
2 – greater innovation
3 – improved diversity
but we think London will deliver only on two of them.
With premiums under pressure, London will need to identify new routes to growth and build a base that invites new talent, capital and innovation to safeguard its legacy for the 21st century. We predict more foreign regulators will follow the example of France and Germany by introducing transitional arrangements (it’s in their national interest to do so). We are also confident that more foreign market entrants – particularly from the US and China – will make good on their intention to develop a Lloyd’s presence. Despite profitability headwinds, a presence at Lloyd’s is still an attractive proposition.
London will also need to build its reputation for innovation. That is what London does best and the more pressure that is applied, the more innovative it will become. We have seen innovations in fields from cyber to blockchain and D&O to supply chain. We hope 2019 will be the year the market gets to grip with global, interconnected risk. Part of ensuring London grows as a hub is ensuring we move with the times to manage risk ‘end-to-end’ through better profiling, enhanced data analytics and sharper insights to control indemnity spend and claims escalation. At Clyde & Co we frame this as a ‘corporate risk’ proposition, rather than a set of siloed solutions.
But there will be one area where we will continue to under-perform, and that’s diversity. To make the most of new market opportunities home and away, we will continue to need new people prepared to think new thoughts. This will involve achieving real diversity across the board and that, sadly, is going to require ever greater effort and over an extended time period.
Rome was not built in a day and the stats show that neither will London be re-built in a year, no matter how hard we all try.
You can read the rest of our insurance predictions here.