A key challenge facing the London market is how to secure top-line growth in a market that has started to soften, and this thread of conversation ran throughout the day’s events at this publication’s London Market Conference last week.
As discussed previously, a core theme emerging from the day was a focus on innovation as a way of pushing back against headwinds and securing expansion without eroding margins.
As CEO Patrick Tiernan said, in a difficult environment, “it may be safer to be bolder” rather than be “frozen by fear”.
But in practical terms, where did market leaders see the opportunities? Several themes emerged – in particular, visions for the global deployment of London’s subscription market expertise via the ballooning smart-follow segment, as well as the opportunity arising from booming areas in the underlying economy, such as data centres and renewables infrastructure.
The headwinds
During the opening panel, Beazley Furlonge CEO Bethany Greenwood said a tremendous amount of work and effort goes into securing even low-digit growth in the current environment, given carriers are “running faster to stay still”.
Tiernan told the audience that Lloyd’s organic top-line growth was running at less than 5%, representing “incremental growth, not volume chasing”, although this could be roughly 10% above 2024 levels if the Corporation as a whole tracks towards the low £60bn range previously forecast for this year.
However, Beazley’s H1 results – and the initial negative market reaction to them that it has since shrugged off – show the challenge of continuing to grow in the shifting environment.
Pushing the London follow lines globally
Several speakers identified opportunities springing from the boom in the smart-follow market. Tiernan noted that growth in cross-class facilities is running at 50%.
Much conversation to date on expansion in broker facilities has focused on fears that these pre-placed deals will drive up competition.
Apollo group CUO James Slaughter warned that if the Lloyd’s pie fails to grow, facilities “will eat up some of that pie ... [and] there’s going to be a bit of a scrap”.
But panellists throughout the day also argued that facilities technology can be applied beyond the London portfolios that have been created so far and used to bring new risks to London.
QBE’s director of portfolio solutions, Tessa Wardle, said her underwriting unit has already brought a “whole load of business into Lloyd’s that didn't come to London at all”.
There were varying views on what constituted the heart of the appeal to be exported in this area – whether it was facility structures that benefit from Lloyd’s global licences and the confidence syndicates have to follow other leaders on the same terms, or more the technology emerging from within smart-follow teams.
On the facilities front, Liberty International Insurance president Phil Hobbs said this expertise may be needed by other hubs in Singapore, retail markets or other global centres that are “all going digital”.
Willis global head of placement Simon Delchar said facilities could be “geographically agnostic” and that Lloyd’s – seen as being part of a local placement – could maximise the positions it took on deals.
But smart-follow technology and algorithmic underwriting can be applied beyond the facilities world, Slaughter noted, as he described it as helping local lead carriers to “create superhuman underwriters”.
“Typically, an impediment for Lloyd’s engaging in really interesting risks is the cost of getting it here,” he said.
“We can reduce that cost and bring all of the innovative underwriting we have in Lloyd's and put it closer to the risk using the technology.”
This could be deployed within the US E&S markets, where some Lloyd’s carriers in recent years have chosen to set up locally to try to access admitted-lines risk.
Axis head of global markets Sara Farrup suggested that delegating authority to MGAs could also become more valuable as the market shifts, as carriers “need to have different avenues and distribution channels to be able to access different market segments and diversify [their] portfolio”.
"They bring us expertise, they bring us access and they bring us agility to markets that perhaps we couldn't access,” she added.
Economic growth zones
Hobbs suggested that following areas of client growth would extend the market’s runway, particularly in infrastructure, where London market carriers could be involved across multiple lines, from surety to credit to liability.
“We play a role in every bit of the life cycle of those infrastructure projects.”
Data centres are another major infrastructure opportunity, and one that Aon estimates could generate $10bn in new premium volume in 2026 alone.
Farrup picked out renewable energy, alongside cyber, as one of two major growth opportunities, arguing that the renewables market is evolving so quickly that the onus is on insurers to provide unique solutions that distinguish between such sources and traditional power stations.
To attract such risks to London, she said carriers must differentiate on things that “aren't just price but expertise and knowledge”.
Recently, Aon estimated that insurance premiums for renewable-energy niches such as battery energy storage systems and hydrogen risks will grow by 10%-25% annually over the next couple of years.
It said this segment could produce more than $9bn of premium by 2030, with the potential for battery energy storage premium surpassing $1bn in gross written premium by 2027, and hydrogen risks growing by 10% to reach $5bn by that point.
Renewable power premiums more generally are forecast to increase by nearly $3bn globally between 2024 and 2030.
Broader tactics
Beyond specific product niches or distribution networks, speakers emphasised the importance of corporate data and analysis in helping to navigate the market.
Nina Arquint, UK & Ireland CEO at Swiss Re Corporate Solutions, said having a strong understanding of portfolio performance drivers was important, along with the ability to understand a firm’s true differentiators.
“Tying it back to the needs of our clients, [we need] to be able to navigate that complex risk environment ... that you can bring the breadth of solutions, the data, the insights ... but also very clearly servicing, we often hear, can be a differentiator.”
Jessie Burrows, CFO at MS Amlin, also suggested carriers must focus on their expense ratios.
“Is every pound counting? It's not just the pound number itself,” he said. “What's the value it's creating? What good investment opportunities have you got?”
Henry Nelson, CUO for the UK, Middle East and North Africa at Liberty Specialty Markets, said the market has had a challenge with nuance.
“Either we're growing because the market's good, or we're holding because the market's not on our back anymore,” he said.
“Cycles are a lot more complex than that. We coined a phrase: less hammers, more scalpels. That is how you need to think about portfolio composition.”
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