Brexit begins to change dynamics but London company market delivers 16% premium rise

No dominant post-Brexit hub is emerging for London company firms, as the market delivered a 16% premium jump in 2017 and its statistics begin to reflect changing dynamics brought about by the UK’s EU exit, according to a report by the International Underwriting Association (IUA). Overall premium income in the London company market jumped to £26.31bn in 2017, up 16% on the previous year, finds the London Company Market Statistics Report by the IUA. Of this, £18.33bn was written in London, while £7.98 was written in other locations but overseen and managed by London operations. Premium written in London was up 14.3% and controlled business written elsewhere up 19.3%. Better data collection may account for one third of the overall premium increase The figures also show that the share of business written in London from Europe, excluding the UK and Ireland, has fallen slightly to 16% from 18% in 2016. Meanwhile, the amount of business overseen by London operations but written outside of the UK’s capital shows a big increase in the proportion classified as European – rising from 34% to 56% in 2017. The value of controlled premium from Europe increased from £2.3bn in 2016 to £4.48bn last year. This jump of 94% is far in excess of any general rise in income observed across the London market as whole. The IUA expects this trend to continue as more and more Brexit contingency plans are implemented and new insurance entities are established across Europe to continue providing services post-Brexit. The IUA said this is not certain however, because a popular Brexit business model is to establish a European platform that enables EU market access, but retains underwriting operations in London as a branch of the new entity. The association’s report notes that no single continental post-Brexit insurance hub appears to be emerging. Decisions have been largely influenced by the location of any existing operations within the group, relationships with national regulators and proximity to customer bases, it explains. Ireland is the most popular location with 16 London market firms setting up in the country, followed by Luxembourg on ten, France and The Netherlands on four, Belgium three and Germany and Malta two. The report also shows a total £3.14bn was underwritten by delegated authorities and a business split between direct/facultative and treaty placements of 77% to 23%. A breakdown of income by class of business reveals property as the most significant sector, accounting for just over a quarter of all income, followed by liability and marine at 17% and 15% respectively. Of total liability premiums, public liability is the largest category of business, generating income of £2.12bn in 2017. Employer’s liability accounted for £503m, cyber £85m and environmental liability £40m. Dave Matcham, chief executive of the IUA, commented: “The growth in overall premium income is the most striking feature of this year’s London Company Market Statistics Report. It is a trend that has also been observed in the Lloyd’s market and is driven by a number of different factors.” Lloyd’s income increased by 6% to £33.6bn last year. “We have received multiple reports of companies embarking on new lines of business and growing premium volumes in specific classes as part of dedicated business plans. There are also instances of books of business being moved to the UK from other companies within a wider multinational group, and of new insurance products being developed and offered to clients,” continued Mr Matcham.

Brexit begins to change dynamics but London company market delivers 16% premium rise

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