Net Zero Business Opportunities Could Double Size of London Insurance Market: LIIBA

Dayana Jones

The business opportunities provided by the global transition to net zero is potentially large enough to double the size of the London insurance market, according to the London and International Insurance Brokers’ Association (LIIBA).

An analysis by the UK broker trade body revealed that the global insurance opportunity created by the transition is estimated to be in the region of $125 billion, said LIIBA CEO Christopher Croft, in a presentation last week before the UK parliament’s All Party Parliamentary Group on Insurance and Financial Services.

This compares with the London insurance market’s current estimated value of $110 billion from the 2020 London Matters Report.

The analysis, conducted by LIIBA working alongside its members, is based on data from international management consultancy Oliver Wyman that achieving Net Zero will necessitate $5 trillion of global investment in green energy annually by 2030.

LIIBA then worked with its members to establish the average ratio between insurance premium and total investment for relevant capital projects. This suggests an annual total of $125 billion of additional insurance-related spend by 2030 for the costs of transition alone, said LIIBA.

Mitigating risk associated with the transition to net zero will entail investment in and adoption of new technology, management of stranded assets as well as insurance expenditure.

Christopher Croft

“For the first time, LIIBA and its members have been able to quantify the level of insurance growth produced by the race to achieve net zero – and it’s a huge sum,” said Croft. “If a significant proportion of that $125 billion came to London, it would transform our market and London’s standing for decades to come. It will also help deliver growth in UK export earnings, UK GDP and employment.”

He said the London market is well-placed to be at the forefront of this transformative process.

“London’s brokers have a unique combination of skills and expertise that will enable their clients to make the changes necessary to achieve the net reduction in carbon emissions required,” Croft added.

“The key for London is to ensure we seize upon this once-in-a-century opportunity by brokers and risk carriers working together to give clients the guidance and the capital backing they need to embark on this transformational journey.”

“As the largest global centre for speciality and commercial risk, the London market has continued to attract international investment for decades. So it’s great that London’s role in building climate resilience in the race to net zero could significantly see an increase in our market’s opportunities, and in turn boost jobs and benefit the UK economy,” said Minister for Investment Gerry Grimstone.

Member of Parliament Craig Tracey, who is chair of the All Party Parliamentary Group on Insurance and Financial Services, said: “This new LIIBA analysis shows the huge potential opportunity net zero is creating for the British economy. As a world leader in risk transfer and risk mitigation, there is a unique space for UK use this expertise and be at the forefront of enabling the global drive towards low carbon and no-carbon technologies.”

The meeting of the All Party Parliamentary Group on Insurance and Financial Services took place on Monday, April 25.

London & International Insurance Brokers’ Association (LIIBA) is the trade association representing the interests of Lloyd’s insurance and reinsurance brokers operating in the London and international markets, accounting for more than 95% of the market’s business.

Source: London & International Insurance Brokers’ Association (LIIBA)

Photograph: The Lloyd’s headquarters building in the heart of London’s financial district.

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