Moore Stephens, the accountants and consultants has said the UK's position at the heart of the world insurance market may be under threat from a combination of regulation and technology.
Michael Butler, a partner in the Moore Stephens Insurance Industry Group, said, “Both the regulators and the IT professionals have it within their gift to change the topography of the global insurance industry.
"And it seems probable that the UK's – and particularly Lloyd's – traditionally perceived position at the heart of the market is under threat.”
Writing in the latest issue of Moore Stephen's Insured Interest newsletter, Butler explained, “Many think [regulation] is going further and quicker than it needs to, and certainly further and quicker than its EU counterparts.
"The rest of the world sees things differently to the FSA, and it is the rest of the world which is grabbing a big share of the international insurance market, at the expense of the UK.”
Butler cites Bermuda as a good example of a financially strong market with huge amounts of new insurance capital, adding that a favourable taxation and regulatory regime is part of the attraction of Bermuda and of other offshore locations.
Butler added: “Technology is the other major factor. It is now possible to analyse, manage and underwrite risk with far greater accuracy and scientific input than used to be the case just a few short years ago. And, thanks to technology, there is no reason why it has to be done from a desk in London.
“The insurance industry should look carefully before it leaps. But expect continuing growth in offshore insurance capital. There is a cachet attached to the Lloyd's badge but, understandably, it comes with a price. The challenge is to still make the badge attractive to wear in the face of increasingly resourceful and plentiful competition. Don't be too surprised if offshore eventually becomes the new traditional.”
