Mona Patel Partner
Chapter 14 - England and Wales Insurance
The UK insurance and reinsurance industry is the largest in Europe and the fourth-largest in the world. Commercial insurance business in the UK is dominated by the ‘London Market’, which today is the world’s leading market for internationally traded insurance and reinsurance.
The London market has two strands: the company market and the Lloyd’s market. It is primarily a ‘subscription market’ in which the broker plays a crucial role in producing business and placing risks with a variety of insurers willing to accept a share.
As its name suggests, the company market is composed of corporate insurers and reinsurers. It is organised through a market body, the International Underwriting Association, and operates principally out of the London Underwriting Centre building and its environs.
From its beginnings in a coffee house in 1688, Lloyd's has grown to be the world’s leading market for specialist insurance. It is not itself an insurance company but rather a society of members, largely corporate but still involving some individuals, that accept insurance business through their participation in competing ‘syndicates’. Each syndicate is administered by a ‘managing agent’ and makes its own business decisions, but Lloyd’s provides both a physical location in which to carry out this business and a regulatory framework of rules with which the syndicates must comply. Lloyd’s also manages the unique regime that protects the security underlying the Lloyd’s market. Lloyd’s accepts business from over 200 countries and territories worldwide.
An important strength of the London Market lies in the number, diversity and expertise of the insurers and reinsurers writing business. Brokers can find the capacity and expertise required for the underwriting of virtually any type of risk. A key feature is the presence of highly skilled ‘lead underwriters’ whose judgments on the terms to be offered for different risks are followed by other insurers in London and overseas. Another important attribute is geographical concentration, with many insurers and intermediaries located in close proximity to the EC3 district, an insurance hub in the City of London. Thus, brokers have a personal relationship with the underwriters with whom they deal. Similarly, buyers of insurance can meet providers and market information is easily shared among participants.
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