TOP 5 THEMES

01

London market post COVID-19

Our current thoughts on London market trading are:

  • It will remain a predominately face-to-face trading environment. This will be a mix of in-person, in-office, and home video-conferencing. Underwriters and brokers will quickly adapt to a new trading rhythm, retaining the best of the COVID-19-enforced experience, where it improved client service and/or work-life balance. Debate is advanced between stakeholders on the way forward, our expectation is broker and client preferences may drive change at first with carriers and technology, the second phase.
  • Both carriers and brokers will use less office space. Some areas in Lloyd’s and carrier and broker offices will be reutilised as innovation and collaboration spaces for multi-stakeholder usage, including clients. We can imagine drop-in video-conference pods becoming common office furniture.
  • A larger share of single contract or less complex placements, along with follow market trades, may be transacted outside of London or work from home (WFH), as brokers and underwriters look to reduce their London office footprint to cut costs and secure a COVID-19 real estate dividend. The increased capture, interpretation, and use of data will accelerate this trend on simpler and follow market business - as brokers increasingly seek alternative risk-bearing capital for portfolios of their clients’ risks.
  • There will be more use of video-conferencing for client roadshows and underwriter meetings. However, risk managers are concerned they missed an opportunity to differentiate their company by not holding face-to-face meetings in 2020. With a backdrop of a hard market, and greater pressure to manage TCOR, we expect a bounce-back in client visits to London and Europe during 2021 and 2022. However, these could become shorter and more focused on key relationships.
  • PPL, the electronic trading platform, saved the London market on closing risks during COVID-19, (credit should go to the previous and current leadership at Lloyd’s for pushing this hard). We envisage the Lloyd’s community will be energised to implement its Blueprint plans, with tweaks for COVID-19 learning, as quickly as possible.

Common with many other industries, the consequences of COVID-19 on work practices will continue to change with technology. When history is written, we expect 2020/21 will be chronicled as a period of accelerated modernisation, keeping London relevant for clients and an attractive location for stakeholders. Ultimately, we believe this will also help the London market recapture some of its historical reputation for innovation and solving client problems that other markets cannot.

"Underwriters and brokers will quickly adapt to a new trading rhythm, retaining the best of the COVID-19-enforced experience, where it improved client service and/or work-life balance. Debate is advanced between stakeholders on the way forward, our expectation is broker and client preferences may drive change at first with carriers and technology, the second phase."

02 When will the hard market end?