The London insurance market has a rich heritage tracing back to the 17th century, when English merchants began trading with the East Indies, the New World, Russia, Africa and the Middle East. London developed into the leading international trade centre, with its growth underpinned by the development of an insurance industry to distribute the risk of individual trading adventures.
Edward Lloyd’s coffee house, which opened around 1688 on Tower Street, was the origin of the Lloyd’s market. The London Company Market started to formalise in 1824 when a Bill was passed to abolish restrictions on insurance which had favoured Lloyd’s. Over time, insurers in London started to write an ever increasing variety of risks, in particular risks with a high severity and low frequency such as natural catastrophe.
There are around 350 re/insurance businesses in London.
Lloyd’s syndicates
Insurance companies
Brokers active in the London insurance market
The London insurance market is the largest (re)insurance subscription market globally and its ecosystem extends to a wide range of affiliate professional services which include claims handlers and adjusters, actuarial consultants, asset managers, accountants, lawyers, IT service/outsourcing providers and other ancillary services.
In a subscription market more than one insurer takes a share of the same risk.
Each London market insurer takes a portion of the risk, not the whole amount. This enables smaller insurers to participate in the market alongside the local branches of the world’s biggest insurers and reinsurers.
In a nutshell, the subscription market enables all the participating insurers to spread their risks efficiently. It also means that clients can find insurance for risks that are too large or complex for one insurer alone.
The London insurance market has a global reputation for delivering on its claims promise – paying over $100 million in claims every week.
The London insurance market’s unrivalled volume, security and flexibility of capital gives it the resilience to take on and pay out on larger-scale risks, in any market condition.
In 2018, a faster and more efficient authorisation of non-complex payments up to £250,000 was launched to help get clients back on their feet faster. In 2020 this was increased to £500,000.
London insurance market participants write globally mobile risks which domestic risk carriers choose not to write due to the non-standard risk characteristics, for which the London insurance market can offer competitive insurance solutions, e.g. worldwide property insurance for ultra high net worth individuals, and specialty business for which international brokers or their clients believe the London insurance market can offer a better price and/or better terms.
In the London insurance market virtually all business is placed by brokers on behalf of their clients – the policyholders and cedents.
The complex nature of large commercial risks led the London insurance market to develop a sophisticated distribution model with several layers of intermediaries along the value chain.
The (future) policyholder or cedent is typically the customer of a retail or wholesale broker. The broker typically contacts a London insurance market broker to place the risk. Hence, for the insurers the definition of their customer is dependent on where they sit within the value chain. A syndicate could see the global and wholesale brokers as its clients, whereas a global broker might deal directly with policyholders or with retail or wholesale brokers.
Open market business is when each risk is presented individually by the brokers to however many insurers are required to fully underwrite the risk.
For the broker, the advantage particularly for unusual risks is that they can discuss the risk with a number of different underwriters. This will give them access to the underwriters’ previous experience and ability to tailor make a solution.
The London insurance market has a history of being the world’s leading specialty lines insurance market, where the more difficult, unusual and high severity/low frequency risks are written. For these lines of business, such as marine or aviation, underwriting needs are highly specialised, substantial capital is required and pooling of the risk from around the globe provides diversification. The London insurance market is a natural home for this business, given its ability to meet these needs.
The London insurance market has a track record of being able to insure the large and the complex. This deep expertise has given it a 42% market share in marine, aviation and energy.
In instances where locally licensed insurers will not accept a risk because it does not meet local criteria, usually because it is too big, too unusual or too volatile, the London insurance market has historically had a reputation for providing cover.
As an example, a substantial amount of the London insurance market business, >38% in 2020, is drawn from the US and Canada.
The London insurance market has a reputation for being at the centre of global risk transfer innovation.
Market participants have historically embraced insuring new risks and have been pioneers for new product development. Beyond entirely new risks, the London insurance market is also an innovator when it comes to being flexible in its approach to policy wording, particularly for more bespoke policies.
Our appetite for challenge and track record in leading new product development is well known. The London insurance market now accounts for 28% of global cyber insurance premiums.
First notification of loss generally goes to the broker; it may arrive with the London broker indirectly through a chain of brokers, or directly from the insured.
The London insurance market has a global reputation for delivering on its claims promise – paying over $100 million every week.
When the broker has received advice of the loss they need to work out the right combination of insurers from which they need to obtain instructions.
The London insurance market’s unrivalled volume, security and flexibility of capital gives it the resilience to take on and pay out on larger scale risks, in any market conditions.
Monies can be paid at any time during the claim lifecycle either as an interim payment of indemnity (sometimes known as a payment on account), or for experts’ fees.
In 2020, a faster, more efficient authorisation of non-complex payments up to £500,000 was agreed to help get clients back on their feet faster.
The London insurance market controls $121 billion of premiums annually. It is larger than the insurance markets of Bermuda, Singapore and Switzerland combined.
It is a true subscription market, with 350 firms and 48,000 interconnected risk professionals within a quarter of a mile of each other.
The London insurance market’s unique ecosystem delivers keen competition between empowered underwriters with an appetite for risk and an unrivalled capacity to take it on.
The London insurance market has helped US businesses and individuals to manage the risks they face for well over a century. It is the largest writer of excess and surplus lines business.
From the San Francisco earthquake in 1906 to 9/11 and the floods, hurricanes and wildfires in 2017 - London Market insurers and brokers have worked with US risks every day. Around 38% of all risks written in the London insurance market are located in North America.
The London insurance market partners closely with US wholesale and retail brokers to build long-term client relationships. The London insurance market earns 25% of its income from excess and surplus lines market.
Insurance is a famously traditional industry, but the London insurance market has introduced a series of initiatives aimed at speeding risks, funds and data among brokers and underwriters to provide a faster service for clients.
The London insurance market launched the first market-wide electronic placement platform. The market’s placing platform allowed trading to continue in 2020 through the COVID-19 lockdown. 400 London businesses are live on the platform and around 200,000 contracts traded every year.
Around one-third of the London insurance market’s business comes from coverholders. The London insurance market has worked to streamline the number of required coverholder audits with a 27% reduction achieved to date.
Our appetite for a challenge and track-record in leading new product development is well known. The London insurance market now accounts for 28% of global cyber insurance premiums.
The London insurance market has been protecting the world’s ships for three centuries and still insures 33% of the global marine market. But it is not resting on its reputation. The London insurance market created one of the first blockchain platforms to provide marine insurance, improving transparency and reducing costs.
The London insurance market is the biggest global commercial and speciality risk market. This means it can offer protection for some of the world’s largest risks. It underwrites the largest marine reinsurance contract – protecting 90% of the world’s shipping fleet from liability risks.
The London insurance market covers some of the world’s tallest buildings and more than half of the top 50 architectural and engineering design firms in the USA are insured in London.
The London insurance market has a track record of being able to handle complex risk. This deep expertise has made it the leading insurance market for marine, aviation and energy risks with 42% market share globally.
Our unrivalled breadth of expertise means that the London insurance market can insure the widest range of risk, from the smallest to the largest, and from the most standard to the most specialist and complex.
Over 200 broking firms operate in the London insurance market and virtually all business is placed by brokers on behalf of their clients – the policyholders and cedents. The complex nature of large commercial risks led the London insurance market to develop a sophisticated risk sharing model. It is coordinated by the brokers and enables risks to be placed swiftly and surely.
Many buyers access the London insurance market for risks that domestic risk carriers choose not to write due to their unique or unusual characteristics. Buyers also come for specialty business on which international brokers or their clients believe the London insurance market can offer a better price and/or better terms. The London insurance market is the largest writer of excess and surplus lines business.
Coverholders are a vital link in the chain for the London insurance market. Around 27% of delegated authority business in the London insurance market comes from the US. Coverholders combine the best of both worlds: the capacity and the expertise of the delegating insurer, along with the benefits of local knowledge, underwriting authority and claims payment.