Max Taylor Chairman of the Islamic Insurance Association of London (IIAL) believes the year ahead can provide the UK market with opportunities if firms are willing to look beyond the conventional.
For the London market 2019 has been a year which is likely to be viewed as one of the most important in its 350 year history.
The Lloyd’s market launched its blueprint for the future and it will be the centrepiece of the wider London market’s efforts to undertake a digital transformation.
At the heart of these efforts is the ability for underwriters and brokers in London to transact business more efficiently across the world.
The year ahead will likely see the UK’s withdrawal from the European Union and as such the ability for London to realise the opportunities outside of the EU will be a significant factor in its continuing success.
The UK government has set a target of making London the leading centre of Islamic financial services outside of the Islamic nations and it is a process that it has been undertaking with some vigour.
Islamic banking, and Islamic share indices and a legal system that is respected across the Islamic world are all in place and the insurance market has the opportunity to be part of London’s success.
The foundations are in place. London has a clear and agreed set of guiding principles for the transaction of sharia-compliant insurance business that ensure the products will be truly sharia-compliant.
The Islamic economy is dynamic with Islamic countries now accounting for 25% of the world’s population. In the words of a senior regional executive this surely cannot be seen as a niche market.
The sums are significant. According to the 2018/19 State of the Global Islamic Economy Report by Thomson Reuters, the Islamic economy continues its steady growth with an estimated spending of US$2.1 trillion in 2017. The value of Islamic finance sector assets was estimated at $2.4 trillion in 2017 and is expected to grow to $3 trillion by 2023.
London has the opportunity, the skill set and the infrastructure to provide commercial insurance cover to Islamic businesses in a way that meets their cultural and legal requirements.
London has an agenda for change and the year ahead will undoubtedly see progress made in driving that change. But underwriters will also be seeking new opportunities for growth whilst the market undergoes its transformation.
The market has a reputation as the home for the risks that cannot be underwritten elsewhere. The demand for sharia-compliant re/insurance is growing and the results of a survey we undertook as an Association demonstrated the appetite for such products is significant.
Whether 2020 will be the year the London market establishes a substantive level of sharia-compliant capacity and range of products, is not certain given the focus on process reform. However, those who are willing to look beyond the conventional and offer Islamic risk products, have an opportunity to access a fast growing economy and once again demonstrate the market’s leading reputation for innovation.