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London's status as top insurance market threatened, Willis exec warns

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London's status as top insurance market threatened, Willis exec warns

LONDON — Brokers and underwriters in the London insurance market must work together to ensure that the market does not lose its position as one of the pre-eminent insurance centers in the world, Steve Hearn, deputy CEO of Willis Group Holdings P.L.C. and chairman of the London Market Group told the LMG's forum Tuesday.

Mr. Hearn told attendees that the London market is facing significant competitive pressure from other financial centers, and other forms of insurance capital, and must work hard to regain its position if it is to avoid losing business.

He said that the LMG — which is made up of representatives from the International Underwriting Association, the Lloyd's Market Association and the London and International Insurance Brokers' Association — would expand its remit to identify areas where action can be taken to improve the market's competitive position, among other things.

Mr. Hearn said that the London market's position as an insurance center had been “sliding” because, in part, of increased competition from other insurance hubs and new sources of capital.

He pointed out, for example, that in 2007, about 16% of the insurance premium placed by Willis worldwide went into the Lloyd's market; now that figure is less than 10%.

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Mr. Hearn also cited the March 2014 Global Financial Centres Index, published by Z/Yen, which ranked London as the second most important global financial center and second for insurance — behind New York in both instances — the first time that London has not occupied the top spot in the six-monthly study since it was first published in 2007.

Mr. Hearn said that, as well as retaining a focus on process reform, the LMG must play a coordinated role in the market's response to the threat to its position as the pre-eminent insurance center and must tackle issues such as developing talent and promoting diversity, coordinating a common voice for the market's dealings with governments and regulators and commissioning research to better understand the market's customers and how to make the market more attractive to them.

Mr. Hearn said that while he believed the London market's position was “under a genuine” and “immediate” threat, “with competition comes opportunity.”

There was now a commitment between senior figures at brokerages and underwriters operating within the market to work together where possible to ensure that the market remains competitive, innovative and attractive to buyers, he said.