The days of plenty are coming for insurers – it’s time to buy

Between Covid-19 and tropical storms, last year will leave insurance companies with some hefty payouts. But investors shouldn’t be put off. John Chambers explains why the cycle is now turning in favour of insurers.

Lloyd's of London insurance market
Lloyd’s of London: an unsung hero of the British economy
(Image credit: © Peter Dazeley/Getty Images)

London is home to one of the great unsung heroes of the UK economy. The London insurance market is the clear global leader in commercial insurance. Most of the world’s largest companies buy at least one policy in London and over $110bn of premiums are underwritten there each year, more than twice that of its nearest rival, Bermuda. Insurance is responsible for a quarter of the GDP generated in the City of London and around 50,000 jobs. Most of the business is for clients outside the UK, so it is a huge contributor to the UK balance of payments.

The market dates back to the formation of Lloyd’s of London in 1688. The 330-plus years of innovation and evolution since then have witnessed several firsts. For example, the world’s very first motor, aviation and satellite risks were all insured at Lloyd’s and more recently, we’ve also seen the first cyber-risk policy underwritten in London. The market is the first port of call for complex risks, such as those surrounding offshore oil platforms and major construction projects. That said, it is probably best known for insuring unusual risks, such as Taylor Swift concerts, David Beckham’s legs and a prize for the capture of the Loch Ness monster. And yet, despite the size and importance of the London insurance market, it is not well known or understood outside of the EC3 postcode. Politicians, journalists and investors alike all tend to overlook it.

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