The report, Best’s Market Segment Report: COVID-19 Throws Spotlight on London Market Modernisation, considers the expense and distribution pressures that are forcing London Market insurers to adapt their operating models in order to remain relevant in a competitive marketplace. And though the outlook on performance expectations for 2020 is looking rather bleak, AM Best notes that the pandemic may well have accelerated a new method of conducting business for insurers, including claims experience and their day-to-day operations.
Indeed, commenting on claims, AM Best said that event cancellation is currently a major affected line for London market insurers, although exposures do depend on policy wordings. And ultimately, AM Best said, the level of losses, which likely also include those from trade credit, surety and mortgage insurance, will only become clear once the financial impact of the pandemic begins to be fully felt.
“The London Market deals with complex and bespoke business with transactions often negotiated on a face-to-face basis. However, the current situation is forcing individuals and companies to be more thoughtful about the circumstances where in-person interaction might not enhance value, and could be done much more efficiently electronically,” Catherine Thomas, Senior Director, Analytics, AM Best, said. “It is clear that some in the market have been much more able to make a seamless transition to the new way of working. Remote working is forcing a long-needed culture change in the acceptance of digital solutions.”
The report identifies that these ‘radical actions’, which have been evident at the individual company or managing agent level, as well as at Lloyd’s, could be a real differentiator to insurer’s success going forward.
Access a complimentary copy of the report here.