What will the post-lockdown London market look like?

The London market is bracing itself for a return to work post Covid, but the new normal will be vastly different from the market which has operated for three centuries.

That return to work is almost certain to see fewer staff, leaving many firms looking at their future office requirements.

Dave Matcham, chief executive of the International Underwriting Association (IUA) said they, like the members have spent lockdown looking how to adapt to the new ways of working.

“You have to have a base in the market,” he explained to Insurance Times. “During the pandemic it has not been a case of how many staff will return and for how many days. It is more fundamental, what is the office for?”

Matcham said research has identified that the office is vital for collaboration, education, innovation and client facing roles.

However he added : “I think we will see a greater emphasis placed on the mental health of staff. I think we are all to varying degrees frustrated with working from our studies or living rooms.”

Hybrid way of working

Matcham said some of his members had already taken decisions on the future office space as leases came up for renewal and the IUA was looking at how it move to a hybrid way of working.

“I believe that the key issues for the market in the next year to come will be digital literacy and mental wellbeing,” Matcham added. “The market will use technology to place non complex risks but there will always be a need for face to face meetings.”

Steve Hearn, chief executive of BGC Insurance Group believes firms are already considering what the new London market will look like and how it will impact their requirements for office space.

“I have to say I have been amazed at how resilient and agile those working in the market are,” he told Insurance Times.

“However, as the days get shorter I think it has also reminded me of how important face to face meetings were. Perhaps we should have cherished them more.

“I hope that we will learn the lessons around technology and we will view the opportunities that the new working models create as something positive that has come out of this tragedy.”

Hearn added: “We, like a lot of businesses will be examining how the market will look after Covid.

”We have four buildings in EC3, whose leases come up next year so it will leave us with a decision to make around the amount of office space we require for the future. However I do not think it will be the same as before given the costs.”

Market dynamics

Managing director of Aegis London, David Croom-Johnson, said Covid and the introduction of new technology will change the dynamics of the market.

“The move to the greater use of technology since the move to remote working has seen the electronic placement of risks via PPL rise to levels that have gone beyond everyone’s expectations,” he explained to Insurance times.

“When we return we have to ask ourselves will the Lloyd’s underwriting room still be there in the way in which we have traditionally known it operate? I believe it will be in a different place in terms of how we will work.”

Croom-Johnson explained: “It is likely we will return to a smaller Lloyd’s trading floor with a bigger digital offering.

“The market will change and as has been seen during the pandemic we will need to be adaptable and flexible. However, we will not be back to working 9 to 5.”

However he cautioned the move to remote working has not been without its challenges.

“A number of the younger people at the firm have been struggling with the second period of lockdown. What the lockdown and move to remote working has shown the market is that we have to look after our people.”

Even before Covid, the tumbleweed occasionally blew down Leadenhall Street on a Friday afternoon

Christopher Croft, chief exec, LIIBA

LIIBA chief executive, Christopher Croft, said change will come but a balance needs to be struck.

“It’s inevitable that people will alter the balance between being in the office and working from home, although most people will want a combination of the two,” he told Insurance Times.

“The trick will be to ensure that people are around at the same time to interact, which should not be too difficult to achieve. Even before Covid, the tumbleweed occasionally blew down Leadenhall Street on a Friday afternoon.”

On the issue of whether London’s offices would see an major exodus Croft says he doubted the market would change fundamentally.

“While some of our smaller members may relinquish their EC3 office space and only come in for meetings, they will still want to come in,” he explained.

“Between meetings, they will ‘mill about’, which is often when the best deals get serendipitously made.

”This is why it is important we get the redesign of the Room in Lloyd’s right. It is in prime position to become milling-around central and thus to be, once more, the beating heart of the market.”

Group CUO of Munich Re Syndicates, Dominick Hoare contended the market can not afford to lose the ability to meet face to face.

“People have been working harder and longer as they work remotely,” he explained to Insurance Times.

Mix of remote and physical working

“The two minute discussion at the coffee machine has become a 15 minute meeting on Teams. We have to be careful going forward.”

Hoare added: “It is likely we will see a hybrid arrangement with a mix of remote and physical working in the market. But we must not undermine the London market’s uniqueness.

“Underwriters, brokers, claims brokers, adjusters, lawyers, all are situated in the golden triangle of EC3.

“It is a community that attracts talent and talented people attract capital.”

Mr Hoare warns the market remains a relationship business and those relationships had to be protected.

“We need to be able to make new relationships and continue the existing ones, that have often been built over many years,” he cautions. “Existing relationships will diminish if we do not meet physically.

”We do not want a revolution, rather a rapid evolution. Revolutions do not tend to end well.”

Lloyd’s CEO John Neal said the market’s performance had been impacted by the inability of underwriters and brokers to meet face to face.

He points to the level of retention at renewals during the pandemic has increased significantly but new business levels have fallen as the difficulties with virtual meetings become apparent.

“When the pandemic caused the need for remote working, we looked to create the capability for the market to operate virtually but also retain the ability to operate physically when it was safe to do so,” he explained.

“We have to remember that a significant amount of business is still done outside of the underwriting room.

“However, face to face has its place on the way the market operates and it will always do so.”