5 London Market Insurance Trends For Surviving 2021 And Beyond

2021-04-21| David Clark & Ruari Scullion

It’s been a tumultuous decade for London Markets, with tough market conditions combined with the existential threats of digitalisation and competitor markets. The pandemic is another headwind – both commercial and reputational – though it may yet prove to be the catalyst for the change needed to return the market to profitability.

With that in mind, we thought we’d peer into a crystal ball to pick out the key London Market Trends For 2021 And Beyond:

1. Market Consolidation was on the up throughout much of 2017-19, with most executives and market watchers expecting deals to continue to rise throughout the coming decade. Whilst the pandemic has understandably slowed down deal-making, the expectation is that over the next year or so, deals will start to pick up. The pandemic has left some with a weakened defence when it comes to acquisition, so as long as cheap debt remains available and carriers continue to search for scaled growth, deals will be there to be done.

2. Exponential Digitalisation is here to stay. The pandemic has brought about an accelerated digitalisation of core business processes, from the near-universal acceptance of remote working, to the obvious cost reduction benefits of having a digital business. Throughout 2021, organisations who seek to further digitise underlying processes with a view to futureproofing their business model will reap the benefits.

3. Talent War – with the business models gravitating towards being technology-led, the capability model underpinning brokers and carriers needs to change rapidly to keep up. Certain skillsets will be in high demand – such as Augmented Reality & VR Specialists – with some of the capabilities being transient, and others required in perpetuity. Carriers materially investing in game-changing technologies and partnerships have already fired the starting pistol on this race for talent. This will no doubt place pressure on brokers to redefine their role as well.

4. The Evolution of the role of Lloyd’s will always play a big part in dictating the landscape. Lloyd’s is trying to change, so it would be a mistake not to plan around a new-look version of the corporation sitting at the heart of the market. Depending on which form it takes, market participants will need to re-define their own interaction model accordingly.

5. Participant Business Model Pivot – market participants will need to make a conscious decision about pivoting their business model to move carriers/brokers away from the revenue streams of today, and towards the revenue streams of tomorrow. Those who don’t set out on this journey will ultimately be disrupted by those that do. This may create a two-tier market, with ‘hybrid’ participants operating alongside ‘pure plays’. We are already beginning to see this in the various ways that carriers are approaching Cyber, with some building capabilities that are typically found in large service integrators. Yet again, this will challenge brokers to rethink where they add the most value in an ever-evolving value chain.

If you have any questions or would like more information, please get in touch with David Clarke or Ruari Scullion