The UK continues to make it clear that ILS is firmly on the governmental agenda as Economic Secretary to the HM Treasury Harriett Baldwin said the country needs to ensure it is “at the cutting edge” of this growing corner of the insurance and reinsurance market.
The UK should be “at the cutting edge” of high-growth financial market opportunities, such as the insurance-linked securities (ILS) sector, according to Baldwin.
Baldwin, as Economic Secretary to the Treasury is the UK minister responsible for financial services and also known as the City Minister. As such, the efforts of the London Market Group, which has established its ILS working group recently, likely come under her watch.
ILS has been earmarked as one of the big opportunities for London as an international finance hub, ever since it was mentioned in George Osbornes budget earlier this year.
This intense focus at senior government levels remains a little surprising, given the size of the market. But perhaps the UK government’s interest is simply testament to the recognition of the potential for growth in ILS and the collateralized reinsurance market.
There has been a slow realisation, among politicians and regulators, that the capital markets and institutional investors direct allocation to insurance and reinsurance risks are likely to continue and grow, perhaps becoming a more meaningful part of the overall risk capital put to work in the world.
It’s likely that this noise from politicians in the UK around the ILS initiative will continue to increase, as it is clearly seen as one of the biggest opportunities in business and finance for the country, alongside financial technology (or fintech).
Baldwin said that her vision for London as a global finance hub, is for it to be the most competitive and a world leading financial market. Insurance and reinsurance are clearly key assets that London already has and, by making the city a hub for ILS activity as well, the government hopes to solidify London’s role in that global market.
Baldwin called insurance-linked securities one of the “high growth industries” that she wants to make London a hub for, ensuring the city and the UK are “at the cutting edge” of the ILS market’s future development.
The UK’s Crown Representative for Insurance Michael Wade said that London needs to be dynamic and fight for its position within global reinsurance and the ILS market, adding that he felt the city had missed a trick by allowing ILS business to develop elsewhere.
Wade explained that it is expected that progress is made on the ILS initiative over the next year, with a hope that ILS business may be transacted in London by this time next year. He’d like to see some updates by the upcoming summer budget and a full announcement in the government budget in 2016.
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