Dave Matcham, Chief Executive, of the International Underwriting Association explains why he believes there is much to be positive about in the year ahead.
2020 is shaping up to be an exciting year for the London Market with new opportunities and challenges that will potentially have long term influences on our industry. To start with the obvious, after months of political deadlock, we finally have a Brexit resolution in sight. London Market companies are now well prepared to operate without UK membership of the EU, but the next 12 months appear crucial in establishing the future trading relationship for financial services in general and (re)insurance in particular. We hope that this will be as efficient as possible with both sides of the negotiations recognising the benefits of minimal barriers to cross-border business. 2020 may also see new opportunities for the London Market to work with the UK government in establishing new trading opportunities beyond Europe.
Whilst the business environment is changing, so too are the risks that our industry covers. Climate change is a growing issue for our industry and in 2019 the Prudential Regulation Authority published a supervisory statement calling on insurers to develop a strategic approach to managing the financial risks it poses. January 2020 will see the first meeting of a new company market group established by the IUA to help members respond to this challenge.
Cyber risks are being addressed right across the market such that the IUA has compiled an overview document to monitor the range of work now being pursued in the area by a wide range of traditional business classes. New research is being conducted and model clauses developed. A particular hot topic, however, is the consequences of cyber warfare.
Other important underwriting issues in 2020 are likely to include the availability of professional indemnity cover and changing construction risks, especially in light of the Grenfell Tower disaster.
Turning to business process reforms, 2020 will be the start of a new era. In 2019 the London Market Target Operating Model programme was concluded and the Future at Lloyd’s blueprint launched. The latter has important consequences for the whole of the London Market, particularly with regard to claims processing. PPL remains the principal vehicle to deliver e-trading and the coming 12 months are likely to see significant enhancements to the platform to make sure it can deliver an effective ‘end-to-end’ digital solution.
Finally, one thing to look out for around the end of the first quarter in 2020 will be the publication of a new edition of London Matters. This research, first launched in 2014 and later updated in 2017, was the catalyst for many industry initiatives to improve London’s international competitiveness. The latest research will again provide a unique insight into the structure of our industry and is set to eclipse previous versions with new analyses of capital, claims and delegated authorities.