LONDON (Reuters) – London has cemented its position as the world’s biggest centre for commercial insurance through a focus on specialist risks but its workforce is ageing and the sector needs to attract young people, a report said on Tuesday.
London wrote $110 billion in gross written premium in commercial insurance and reinsurance in 2018, increasing its lead over Bermuda, Switzerland and Singapore combined to $23 billion from $16 billion in 2015, the report by lobby group London Market Group (LMG) and consultants McKinsey showed.
The numbers allay worries London would lose out to other centres.
“There was a fear that Bermuda would come and eat our lunch and there would be a gravitational pull away from the London market – that hasn’t happened,” said Clare Lebecq, Chief Executive of LMG.
“It’s testament to the innovation we have here.”
Lloyd’s of London and other commercial insurers with UK operations are famed for covering complex risks from oil rigs to cyber attacks.
London’s share of global commercial insurance grew by 0.1 percentage points, with North America becoming its biggest market, surpassing its previous top market of Britain and Ireland.
But in global reinsurance – insuring the insurers – London’s market share fell by 1.7 percentage points.
London faces competition from global reinsurers in growing markets like longevity risk, and the cost of transacting reinsurance business in London is higher than in centres such as Bermuda.
The London market is also ageing – 26% of the workforce was over 50 in 2019 against 16% in 2014, while the proportion of workers under 30 shrank to 20% from 23%.
“The insurance industry has historically not been good at promoting itself outside of its own market, and there is still too much hiring based on relationships and connections rather than wider searches for talent,” the report said, adding that London should establish a more coordinated recruitment process.
Forty-five percent of the workforce were women in 2019 compared with 44% five years earlier, the report showed. But the median gender pay gap of 30.6% was far higher than the UK average of 10.9%, and women made up only 25% of the market’s top earners.
Insurers in London have been attempting to improve their record on diversity, with Lloyd’s acknowledging issues with sexual harassment and daytime drinking.
(Reporting by Carolyn Cohn; Editing by Giles Elgood)