A report from International Financial Services, London (IFSL) notes that gross premiums on the London Market fell 15 percent in 2004 to £21.7 billion ($37.3 billion)
According to a new edition of IFSL’s Insurance Report, the decline follows five consecutive years of growth during which premiums increased by more than 80 percent.
IFSL is a private sector organization, predominantly funded by membership subscriptions. It has been promoting the U.K.’s financial services industry throughout the world for over 30 years, as an independent cross-sectoral organization.
The report further notes: “In 2004 Lloyd’s generated 54 percent of known London Market gross premiums with the company market generating 44 percent and P&I Clubs the remainder. London is a leading centre for international insurance and reinsurance, particularly for marine and aviation business.”
The IFSL also indicated that the overall “U.K. insurance market was the largest in Europe and third largest in the world in 2004 with premium income totaling over £150 billion [$258 billion]. This was down 3.4 percent on the previous year and 16.5 percent below record premiums generated in 2000. The fall since 2000 was due to a decline in long-term premium income. The U.K.’s life market premiums were almost double those of any other European country. Its non-life market was also the largest in Europe in 2004, having overtaken Germany two years earlier.”
In 2004 the U.K.’s long-term insurance premium income totaled £110.2 billion ($190 billion), down 2.4 percent on the previous year. However, the IFSL report states: “Profitability and financial strength of long-term insurance companies has improved over the past two years due to cost savings, lower exposure to equities, recovery in financial markets and improved underwriting results. UK long-term insurers were particularly affected by falls in equity markets between 2000 and 2002. General insurance premiums totaled £40.3 billion [$69.3 billion] in 2004. They have changed very little since 2000 due to the slowdown of the global economy.”
The insurance sector is an important part of Britain’s economy. It accounted for 2.3 percent of UK GDP in 2004, “although this excludes brokers and other auxiliary professions,” said the IFSL. “The industry employed 325,000 people in 2004, including 40,000 in the London Market. Employment was down 10 percent due to post-merger rationalisations and cost cutting in the insurance arms of large financial institutions.”
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