London insurers lost a whopping £4.5 billion premium last year as companies restructure for Brexit says the International Underwriting Association (IUA).
This ‘controlled’ premium was previously written in European offices but managed by London market companies. The London market still wrote some £6.2bn in controlled premiums, which are written outside the UK’s capital but managed within, last year. But this is down from £8.8bn in 2018.
The IUA said planning for Brexit had cost London market companies.
“Reorganisation and the impending loss of financial services passporting rules has meant that a large amount of business written in Europe is no longer overseen and managed in the same way by London, but reported directly to operations located within the EU,” said Dave Matcham, its chief executive.
“Such restructuring has increased costs for IUA members, making them globally more inefficient and, ultimately, less able to offer a better deal for clients,” he added.
Overall, London market companies increased premium income from commercial and wholesale risks by 10% last year to £21.4bn, the IUA says in a new report. The figure rises to £27.6bn when combined with £6.2bn in controlled premiums, but excluding those now recorded by European entities.
The IUA said London market companies had seen strong premium rate increases across almost all business lines in 2019. “The hardening market conditions are supplemented by firms developing growth areas such as cyber and transfers of business from Lloyd’s of London into the company market,” it said.
The IUA’s annual statistics report recorded three new lines of business. These were: political risk, which recorded premiums of £261m; trade credit, where premiums totalled £243m; and standalone cyber with premiums of £253m.
Mr Matcham said the London company market had returned “a remarkable performance” in 2019, with growth in energy, aviation, property and professional lines. He added that business written through managing agents with delegated authority increased by 28%.
In its tenth year, the IUA’s statistics report has tracked growth in the London company market from premiums of £19.6bn in 2010.
“The make-up of market participants has also altered with an increase in overseas capital, consolidation among the largest players and firms increasingly operating in both the Lloyd’s and company markets,” Mr Matcham said.