Failure from the London marketplace to create a competitive insurance-linked securities (ILS) regime will be a “massively missed opportunity” that will most likely see another jurisdiction fill the void, according to Des Potter, Head of GC Securities, EMEA.
“If London doesn’t become competitive in this market, then what I will predict is another jurisdiction will, and it’s likely to be somewhere in Asia, be it Singapore or Beijing. And I think that will be a massive missed opportunity for London,” stressed Potter, speaking on a panel at City & Financial’s ILS conference in London at the start of December.
It’s an important point, and highlights the significance of the UK government and the UK’s insurance industry continuing to collaborate and consult on the proposed ILS regime, which is expected to come into effect during the first-half of 2017.
It also highlights the huge opportunity that the London marketplace has to do this right, and utilise the depth and breadth of the Lloyd’s of London and broader London insurance industry’s skillset and experience, alongside the expanding ILS space.
Joanna Buckenham, Lloyd’s of London’s representative on the London Market Group’s (LMG) dedicated ILS task force, speaking on the same panel as Des Potter, said, “London and the Lloyd’s market have always had an ability to attract capital. Now what we have is an opportunity, to marry up, a burgeoning alternative capital base with that underwriting expertise.
“So that market should develop, and I think it should develop with the ability of some complimentary product, which is a good thing not just for the UK but all the jurisdictions in which ILS plays a part, I think that creates opportunities.
“The ability to leverage the intellectual capital that we have here in London, to match it to an efficient capital base, I think can only be positive,” continued Buckenham.
The need for London to get this right has been stressed by a number of industry leaders and experts in recent times, including Malcolm Newman, fellow panelist, and Chief Executive Officer (CEO) of re/insurer SCOR’s Paris London Hub.
“If we are really going to do this then we have to do it properly, there’s no point in putting a toe in the water and let’s see how it goes, and lots of restrictions and barriers, because it won’t work.
“We felt that this was a market (ILS) that London had missed, it had been developed elsewhere, it was growing and it was innovative, and lots of people in London were involved in that market,” said Newman.
“We want London to be able to compete with other jurisdictions and actually to be given at least a level playing field, and why not give ourselves some advantages if we can. Because ultimately the UK needs the insurance industry to continue to export, we need to continue to grow our insurance industry and ILS is a product and a sector that we can grow in,” continued Newman.