The recent announcement of the Lloyd’s Market 2017 underwriting loss brought into sharp focus the tough conditions the market is facing.
While the high-profile HIM Natural Catastrophe losses obviously had a significant effect’ the picture is more complex than that. The Lloyd’s Annual Report showed that of the various classes written in the market, only Energy had a combined ratio under 100%.
Among the other issues facing the market, one of the most prominent is the continued appetite for “alternative” capital for Insurance Risk in a market that already shows signs of excess capacity. This continues to limit the ability for carriers to increase rates.
This is also impacted by broker consolidation. With fewer, larger brokers controlling the market, the brokers have significant power which they are able to exert to keep rates down. While technology opens up possibility for disintermediation in other sectors, the complex speciality risks the Market handles means the demise of the London Market broker is not on the horizon. Innovations like the Aon Client Treaty will continue to help brokers temper rate increases.
Having been recently at the Trading Risk ILS conference, it was clear from the lively interchange between Paul Schultz (Aon Securities) and Luca Albertini (Leadenhall Capital Partners) that the combination of readily-available capital and broker power have kept rate rises in response to HIM relatively modest.
The London Market has long recognised that it must modernise to cope with the rise of competitor hubs (Bermuda, Zurich, Shanghai) and while TOM has certainly been more successful thus far than prior initiatives, these results shine a harsh light on how much more there is to do and the urgency of response.
As a technology provider, Eurobase recognise the important part we have to play in ensuring our clients can embrace change. We recognise the opportunity as well as threat that new technology brings to our clients, and the benefits of a trusted partner to deliver quantifiable value. As such, we are delighted to be hosting a stream at TINtech with talks by Adrian Thornycroft (TOM Programme Director) and Steve Jolley (CIO, Price Forbes) on the subjects of the TOM and the further need to innovate for the market.We look forward to seeing you there and discussing these or other issues.