Facing up to the fact that the competition is getting better

The story of managing insurance and reinsurance liabilities or legacy business in London has so far been a story of rapid and continual growth, allied to ever-increasing sophistication in management techniques and trading mechanisms. But, according to Philip Grant, chairman of the Association of Run-Off Companies (ARC), it would be foolish not to recognise that London’s pre-eminence is open to challenge. Here Mr Grant identifies and describes the possible challenges and suggests ways in which the city’s run-off community can rise to them. This is an edited version of Mr Grant’s recent lecture to the Insurance Institute of London

To begin with a little historical perspective, the reason why London became the world centre of run-off was not, initially, its brilliance in managing it. The unpalatable truth is that London became the centre of run-off because it had in the past underwritten so much bad business, whether by accident (as one might say of the US CGL policies that found themselves responding to completely unforeseen types of losses) or by design (as one uncharitably disposed could argue of much of the LMX market of the 1980s).