Two years have passed since the last International Underwriting Association (IUA) review published by The Insurance Insider and one thing at least has changed - the size of the London company market itself. With premium volume growing despite depressed rates in some key classes of business, notably aviation, the ever-improving data gathered by the IUA shows growth in the amount of premium written elsewhere but declared as controlled by London operations.
Of course, any publication focusing on a particular market risks being parochial by its very nature. We all know London is a centre of excellence for some of those specialist covers that other markets perhaps lack the depth of capacity or breadth of experience to handle, but a key strength of this particular market is that its participants are not afraid to get on a plane and go and find that business.
What is particularly encouraging about the IUA's latest market survey is that it emphasises the point that London is not just a global market, but also that for international firms, basing an operation here is a key element of running a global insurance business.
As the IUA's Scott Farley points out in his introduction to the survey, at £6.2bn, the premium income from London-controlled overseas business represents a quarter of total London company market income, with Europe and Asia contributing the most significant shares of premium.
The growth of our featured company in the profile on page 22 is a fitting example of the market's global nature. American International Group was already a global player by the time it set up shop in London, with operations across Southeast Asia, Europe and the US. It has since leveraged its position in London to build an even wider and deeper global network, utilising the skills of London underwriters in addition to those in local markets.
Role model
However, it's not all good news. Following the International Union of Marine Insurance (IUMI) conference in September, of which the IUA is a co-host, the current plight of the marine market came to light.
The IUMI facts and figures committee reported that the market is currently making a loss due to a range of factors, not least some huge claims, such as the Costa Concordia disaster and the onshore cargo losses from Superstorm Sandy.
Our feature on the marine market (see page 24) highlights a couple of areas that would go some way to improving the lot of marine insurers - and which are dear to the IUA's heart - namely more and better data and better risk modelling. A common cry from insurance market commentators perhaps, but one worth repeating loudly and often.
Modelling features more than once in this publication. With flood as a key theme at the IUA's Catastrophe Risk Management Conference in October it seems fitting that this topic was taken up in our feature on natural catastrophes on page 48. This year's toll of flood losses from events across Europe and Canada have raised the spectre of adequate risk modelling once again - or rather the spectre of non-modelled risks which, one might think, should already be covered by existing models.
It is clear that better data on flood perils, coupled with better cat models and a more informed use of those models, is key to maintaining London's profitability as the market expands its reach into new geographies and encompasses new exposures.
That said - good data and good underwriting will ultimately hold sway when it comes to writing profitable business. If the London company market is to continue its successful mission as a global centre for specialist underwriting ability, a continued adherence to providing both will be essential.
Enjoy the read!
Gavin Bradshaw, Editor
To view the IUA Review 2013 please click here.