For more information on the shifting landscape of the global commercial-insurance market, please visit: https://www.bcgperspectives.com/content/articles/insurance_perspectives_in_insurance/

1. 22 | Perspectives in Insurance
INDUSTRY SPOTLIGHT
THE COMMERCIAL-INSURANCE
AND REINSURANCE MARKETS
LONDON VERSUS THE WORLD
Currently the largest global hub for commercial and specialty risk,
controlling more than £60 billion in gross written premiums in 2013
As an industry, it insures all conceivable types of risk
Written by London: £45 billion
Controlled or marketed by London: £15 billion
Reinsurance Commercial insurance
For one F1 driver,
up to
$50 million
Cristiano
Ronaldo’s legs
$144 million
Bruce
Springsteen’s voice
$6 million
The Oscars
jewelry
$27 million
Costa Coffee
taster’s tongue
£10 million
48%market
share
57%market
share
33%market
share
London
Overall size: £60 billion
(growth rate: 4%)
Switzerland
Market size: £19 billion
(growth rate: 5%)
Bermuda
Market size: £25 billion
(growth rate: 4%)
Singapore
Market size: £4 billion
(growth rate: 13%)
More than 350 market participants operate within
400 meters of Lime Street
It also insures
bespoke risks
such as the
following:
This “infographic” originally appeared in the re-
port London Matters: The Competitive Position
of the London Market, a collaboration between
London Market Group and The Boston Consulting
Group. For more on the London insurance market,
please visit www.bcgperspectives.com.

2. The Boston Consulting Group | 23
The market is a substantial contributor to the London economy
21% of the city’s GDP
8% of London’s GDP in 2013
… and supports the broader global economy by paying large
claims every year
professionals
in London34,000
It employs 48,000 people…
Another 14,000 work for London
market companies in the UK, but
outside of London
Deepwater Horizon
2010
$600 million
Japanese earthquake
and tsunami 2011
$1.95 billion
New Zealand earthquake
2011
$1.2 billion
Australian floods
2011
$650 million
More than £140 billion
paid in claims in the past five years

3. UK
and Irela
nd
change in London
share
+0.2 p.p.
Ot
her Americ
as
Africa
Europe
Australasia
Asia
In addition,London is not keeping pace with emerging-market
growth:its share declined from 2013 through 2014
London is tracking market growth only in commercial insur-
ance,while it is losing share in reinsurance
Tracking share in
casualty,
property,
motor, and marine
Gaining share in
aviation (+8%)
and other (+1%)
Losing share in
energy (–3%)
and reinsurance (–2%)
4%
market growth
10%
market growth
5%
market growth
8%
market growth
1%
market growth
1%
market growth
11%
market growthchange in London
share
+5.8 p.p.
change in London
share
+0.5 p.p.
change in London
share
+0.5 p.p.
change in London
share
+0.5 p.p.
change in London
share
+1.3 p.p.
change in London
share
+0.1 p.p.
However, London’s unique position is under threat
U.S
.and Cana
da
24 | Perspectives in Insurance—Industry Spotlight

4. The Boston Consulting Group | 25
This translates into six challenges
to London’s position...
1
4
2
5
3
6
London needs to meet substantial unmet
demand for new products and solutions,
building on its reputation for innovation
and flexibility in order to offset the
commoditization of more traditional
risks.
London is losing share in
reinsurance (from a 15%
share in 2010 to a 13% share
in 2013) as purchasing is
increasingly centralized
and emerging-market
growth gains importance.
The comparatively high
regulatory burden on
London market participants
raises costs and could put
London at a further price
disadvantage should the
burden become greater than
the value of regulation to
customers.
London does not have a
strong position in emerging
markets, and its share of
business in these markets
declined by more than 20%—
from 3.2% in 2010
to 2.5% in 2013.
London’s expense ratios were
9 percentage points higher
than those of its peers in 2013—
driven by higher acquisition and
transaction costs—putting it at
a price disadvantage for more
price-sensitive risks.
The prolonged so-market cycle,
propagated by the superabundance of
capital and securitization of insurance risk,
challenges London’s role as the supplier of
additional capacity to meet local needs.

5. 26 | Perspectives in Insurance—Industry Spotlight
1
3
2
5
4
6
... and six opportunities for
London to enhance its position
London can meet substantial unmet
demand for new products and solutions,
building on its reputation for innovation
and flexibility in order to offset the
commoditization of more traditional
risks.
London can reinforce its strength in expertise-
based underwriting with improved analytical
techniques to deliver value to customers,
enable better selection of risk, and help
retain more commoditized business.
It can invest in marketing the
strengths of the London market—
particularly in emerging markets—
to stimulate customer demand
and encourage brokers and
carriers to remove barriers to
placement.
It can reduce the cost of doing business
by delivering on infrastructure activities,
removing London-specific processes
and realizing economies of shared
service to increase competitiveness
for commoditized risk.
London can break down
barriers to reinsurance
and intermediation and
develop the distribution
network, creating an appropriate
local presence that will allow it
to compete more effectively in
high-growth markets.
London can embrace the rise of
alternative capital in order to take
advantage of deep capital markets,
build capacity in capital-scarce
lines, and protect against extended
so-market cycles.