UK Economic Secretary to the Treasury, John Glen, has said the insurance industry is more important to the country now than it has been at any time in its history.
Glen (above) made his comment in the foreword to a new report ‘The London Insurance Market: Beyond 2021’, in which he added Brexit had also change the industry’s dynamics.
“The UK insurance industry in 2021 is as important to the country and the wider world as it has been at any time in its four centuries of operation,” he said. “Employing 300,000 people in the UK, paying over £10 billion in taxation and managing investments of almost £2 trillion – the insurance sector remains one of the jewels in the crown of the UK financial services sector and a vital driver of the UK’s economic engine.”
Glen added that the country’s future outside of the European Union would be one where the country will look to global trade and will require the support of the insurance industry.
“With the UK’s departure from the EU, the country has entered into a new era of international commerce defined by the creation of new trading opportunities and relationships by government and industry,” he explained. “Just as they have done for more than 200 years, London’s insurance firms are adapting to this new environment by exporting product lines, complex policies and unrivalled expertise around the world as a clear example of how a world class industry can make a huge contribution to ‘Global Britain’.
“This determination to seize the commercial opportunities of a new era runs in parallel to the industry’s capacity to help address some of the big issues the world faces in 2021. The tools and expertise that the UK’s insurance sector can bring to bear to help address challenges like climate change and postpandemic recovery will demonstrate that the industry’s value to the world goes beyond the purely commercial.”
Published by Aon and supported by the City of London Corporation, the report also includes comments from Lloyd’s CEO John Neal on the need for the industry to meet the challenges of the emerging risks such as climate change.
He highlighted the work the London market has carried out around the provisions for cover to protect the distribution of COVID-19 vaccines and the creation of Black Swan Re, a reinsurance framework for government and insurance industry partnership, which could enable industry pooled capital to provide reinsurance for the impacts of future black swan and systemic events, backed by a government guarantee.
“These approaches and initiatives are just the beginning of our commitment to work with, and beyond, the industry to close the protection gap and improve societies’ resilience to systemic risks,” he added. “And there are many – from cyber, to food and infrastructure failures, to terrorism and war.
“But there is one systemic risk, that is front of mind for many of us: the climate crisis. Like COVID-19, climate change is a risk multiplier, threatening to accelerate the development of risks of different kinds. As these risks multiply, so too do the gaps in protection. The physical risk of climate change has already brought an increased number of natural disasters to communities worldwide, from wildfires in California, to floods in Australia and heatwaves across Europe.
“The Lloyd’s marketplace is on the frontline of this challenge, supporting our customers and communities to protect against extreme weather events and recover quickly, if they do occur. The other major risk brought on by climate change is transition risk – the disruption associated with a necessary but transformative redefinition of the global economy. Lloyd’s and the wider insurance industry are key here too – providing the expert guidance and support so industries can take risks and innovate, building in real time the sustainable and resilient economies of the future.”
The report comprises seven short essays from political and industry leaders on areas of focus and strategic importance for the London insurance market. It explores the industry’s growth prospects and future opportunities, with a focus on London’s international standing. Key topics include the need for innovation, the role of public and private sector collaboration, and the need to close the protection gap by preparing for future systemic risks.
Julie Page, Chief Executive Officer, Aon UK said: “Our report, supported by the City of London Corporation and with insights from a diverse selection of senior leaders working across the insurance sector, is focused on the essential questions we all need to be asking ourselves as we look beyond 2021.
“The insurance market is at a turning point; COVID-19 has proved one of the most challenging events in our sector’s history, which came at a time when there is also a pressing need for cultural and technological evolution. At the same time, the industry is very positive about the future of London as a global financial centre.
“We also have significant growth opportunities, with our sector pivotal in helping businesses, individuals and governments in managing the many new and changing risks they are facing. Our report reflects on these challenges and opportunities, outlining an optimistic vision for sector in 2021 and beyond, with London remaining at the heart of the global commercial (re)insurance market.”