The London Market Group (LMG) has published a 5-point plan involving regulatory and legislative changes aimed at fostering London’s growth and taking full advantage of new opportunities.
The first involves a more proportionate approach to regulation in recognising both the nature of the large complex risks and the sophisticated corporate buyers served.
LMG considers the activity-specific approach to regulation set out in Phase II of the UK government’s Future Regulatory Review as an opportunity to recognise the differences between various industries.
A more proportionate approach to individual sectors, LMG argues, would make a greater contribution to the UK’s economic recovery while boosting competitiveness and making the London Market more attractive to international investors.
LMG would welcome a regulatory approach which recognises the nuances between each of the insurance markets operating within the UK and says any such framework should recognise the specific characteristics of the London Market.
Secondly, LMG outlines the importance of maintaining London’s appeal to international players in a regulatory sense.
It’s noted that the emergence of centres of capital in places such as Singapore, Dubai and Miami has significantly increased the number of markets able and willing to write risks that previously might have had no choice but to go to London.
While these new centres do not currently have London’s depth of knowledge or expertise, they are a lot cheaper to operate in.
LMG’s concern is that, over the long term, these new centres will become a more viable alternative and compete for premium, putting further pressure on London’s share.
Making London a natural home for foreign re/insurance companies by reforming the Solvency II regime is also among LMG’s suggestions.
With Solvency II seen as having brought significant benefits and strengths to London, LMG does not support wholesale changes to the regime but rather certain refinements to a unnecessary requirements, such as those involving the treatment of branches of overseas firms.
LMG’s fourth point involves promoting a UK captives market, which is seen as a way of increasing the buyer choice and growing the overall market.
Lastly, LMG highlights the importance of access to emerging markets around the world in creating new revenue streams and helping them build resilience against natural disasters through trade negotiations, regulatory dialogues and market promotion.
“Right now, the UK government is looking at how financial services should evolve in a post-Brexit world, and the London market wants to seize the moment while there is a willingness to support positive change that can benefit the insurance industry,” said Sean McGovern, CEO of UK and Lloyd’s at AXA XL and sponsor of LMG’s government relations work.
“The LMG has taken part in various government consultations on the future regulatory framework and Solvency II.
“This document will form the backbone of a comprehensive campaign by the LMG, working with ministers, parliamentarians and the regulators to reinforce the importance of the insurance market and to ask for what it needs to continue to grow globally.
“We have put forward a five-point plan to support the UK’s competitive position, grow our exports and deliver increased levels of foreign inward investment into both London and across the regions of the UK, where the market is expanding.”
