Report: London losing reinsurance share

London is at risk of losing its global share and importance in reinsurance to places like Bermuda, a new report has warned.

London Matters — The Competitive Position of the London Insurance Market, commissioned by the London Market Group, said that the City of London’s share or reinsurance had dropped from 13.4 percent in 2013 to 12.3 percent in 2015.

The report blamed centralised reinsurance purchasing and a weaker presence in emerging markets, which are gaining in importance.

And it said: “Regulatory regimes have supported the growth of alternative capital such as in Bermuda. The London Market is by nature not set up to compete for large structured reinsurance deals and is not well placed to compete with global operators for growing markets in mortality/longevity risk.

“Competitive market has intensified the advantage of carriers with the lowest cost of capital and expenses, putting London reinsurers at a disadvantage.”

Bradley Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers, said: “It’s a fascinating report. Bermuda is a leader in property-catastrophe reinsurance, energy, excess liability and alternative capital feeds into those and other lines of business. Bermuda’s commercial insurers and reinsurers have accepted the role of alternative capital and tried to play it to their advantage as well.”

Kading added that the “biggest surprise” in the report was the growth of Zurich in Switzerland as an industry hub.

The report, however, said that London’s position in insurance was “broadly unchanged” in 2015, with a seven percent share of the global commercial insurance and reinsurance markets.

It added that the weakness in reinsurance and emerging markets was cancelled out by gains in specialist areas like marine, energy and aviation.

But the report warned that all three of those markets were shrinking, although London’s sales were falling more slowly than the market as a whole, according to The Royal Gazette.