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Business Environment

Business Environment

Overview

We want to create a business environment in which the market can flourish, so that London is able to respond to new client demands and existing and emerging risks.

To help us achieve that the LMG will:

  • Proactively engage with the UK government, parliamentary parties and the civil service to ensure they better understand the position of the London Market and its place in the UK economy
  • Develop an agenda for government to enhance the international competitive position of the market
  • Ensuring that the regulation of the market is appropriate and is proportional to the risks we pose, recognising the market competes globally for business, investment and people.

London should be the fulcrum of insurance invention, the place where new solutions that meet new customer demand are developed and nurtured.

  • Sean McGovern

    Chief Executive Officer

Governance

The LMG Board sponsor is Sean McGovern. Other workstream members are:

– Adam Thomas, Luther Pendragon
– Cameron Murray, Lloyd’s
– Ashley Prebble, Clifford Chance
– Suzy Awford, AIG
– Christoper Croft, LIIBA
– Helen Dalziel, IUA
– Josh Cartwright Bain, Lloyd’s
– Arabella Ramage, LMA
– Scott Farley, IUA
– Jason Groves, Marsh
– William Gray, Luther Pendragon

Progress

The LMG has been campaigning over the last year for five concrete changes that will allow the market to seize new global market and trade opportunities.  The most important of these is a competitiveness objective for the regulators, and that is now set to be included within the upcoming Financial Services and Markets Bill.

The House of Lords Industry and Regulators Committee  inquiry  on the regulation of commercial insurance and reinsurance raised concerns about the lack of regulatory proportionality which they found was holding back the market.  As such, regulatory reform will play a critical role in ensuring that the UK remains a competitive jurisdiction, attracting investment and capital.  The LMG and its members have developed proposals about how both the Bill and the current Solvency II Review could help to facilitate a real boost in UK competitiveness and inward investment.

To read the full five point plan – LMG_5-point-plan.pdf

1) Recognise the nature of the large complex risks we cover and the sophisticated corporate buyers we serve, through a more proportionate approach to regulation.

LATEST STATUS: In April 2022, the House of Lords Industry and Regulators Committee concluded its inquiry and in recommendations to the City Minister called on the Government to introduce a greater focus on proportionality in the UK’s regulatory framework.

Following the LMG’s campaign the PRA has said it will move to authorise more quickly and proportionately without necessarily having all capital and executives in place.

2) Ensure that the London Market remains the most attractive home for large risks through an international competitiveness duty for UK regulators.

LATEST STATUS:  In November 2021 the Government adopted the LMG’s proposal for a competitiveness and growth duty for both regulators, recognising that “the financial services sector is not just an industry in its own right but an engine of growth for the wider economy.”

The Industry and Regulators Committee similarly backed our calls for a competitiveness objective and went further by backing the LMG’s call for a “clear criteria and appropriate performance measures” alongside it to ensure accountability.

3) Make London a natural home for foreign (re)insurance companies by reforming the Solvency II regime.

LATEST STATUS: HM Treasury is progressing its review of the Solvency II regime and has proposed a number of amendments, including the removal of some reporting requirements.

At the end of 2021 the Prudential Regulation Authority (PRA) created a Solvency II Reporting Requirements Working Group, with LMG members represented, to consider what reporting requirements can be removed or amended.

HM Treasury has also announced proposals to remove the requirements for UK branches of foreign insurers to calculate branch capital requirements and to hold local assets to cover them. This reform should benefit around 160 branches

immediately, as well as any other branches that establish in the UK in the future.

The PRA is considering a “green lane” for ILS applications to speed up approvals with more detail to follow.

4) Increase the choice of buyers and growing the market by developing and promoting a UK captives

LATEST STATUS: The LMG has presented its proposals to HMT and the PRA, and a dialogue is underway to take this work forward through a joint working group.

5) Gaining access to emerging markets around the world, to help them build resilience against natural disasters and climate change events through trade negotiations, regulatory dialogues and market promotion.

LATEST STATUS: Both the UK-Australia and UK-New Zealand Free Trade Agreements (FTA) include commitments on the provision of “large risk” business.

This was the first time such provisions have been included in UK FTAs, establishing an important precedent for the UK’s trading relationships with other nations in the future.

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