LONDON: London’s share of the global reinsurance market is falling as rivals such as Bermuda and Singapore take more business and the British capital is also missing out on insurance business from emerging markets, a report said on Tuesday.
Lloyd’s of London and other insurance companies operating in the city made up 12.3% of the US$165 billion global reinsurance market in 2015, down from 13.4% in 2013, Boston Consulting and London Market Group said in the report.
London’s share of insurance markets in Africa, Asia and Latin America was 3.3%, 2.7% and 8.1% respectively, all lower than in 2013 even though the markets themselves have grown.
“Tough market conditions continue and London is still facing challenges in reinsurance and emerging markets,” the report said. “The London Market brand does not resonate in emerging markets.”
London was facing strong competition in reinsurance from emerging markets as well as from centres such as Bermuda that have focused on catastrophe bonds and other alternatives to reinsurance, the report said.
In emerging market insurance, companies have preferred to buy insurance locally and London market players have also sometimes been reluctant to take on emerging market risk, the report said.
Britain’s vote to leave the European Union has provided a further headache for insurers, with Lloyd’s of London planning a subsidiary in Brussels to compensate for a potential loss of access to the bloc.
London Market Group, an insurance industry lobby group, said it was working to make the London market an easier place to do business, with a more diverse workforce.
The report said London had, nevertheless, increased its market share in specialist insurance such as aviation, energy and marine. Overall, London’s share of the US$800 billion global commercial insurance market was unchanged at 5.8%.