Is regional growth a double-edged sword for the London market?

Amidst the ongoing transformation of the insurance industry outside of its traditional centre in London, a question comes to the fore – does the rise of regional hubs represent a threat or an opportunity for the London market?

In April this year, broker Verlingue announced it had opened a new office as part of its ambition to expand its existing client base in the midlands and south west.

As part of his role as the newly appointed corporate director at Verlingue, Ian McKinney will head up the new location. He told Insurance Times that the firm’s new Birmingham office would provide the business a “strong backbone and presence across the whole of England” and a “real link up” with offices nearby.

Meanwhile, Aston Lark, which was acquired by Howden in 2021, announced it had boosted its regional presence by opening new offices across the UK. In June 2023, the company announced the opening of new offices in Reading, Norwich and South Wales.

Insurance supplier Keoghs also announced that it had opened a new office in Leeds in July, with the intention of integrating and aligning its single source services with brokers and insurers across Yorkshire and surrounding areas.

Allianz Commercial’s UK chief distribution officer Nick Hobbs, on the other hand, also told Insurance Times that while the insurer had always maintained a strong branch network across the country, it was continuously exploring ways to strengthen and focus on that branch network.

The Covid-19 pandemic saw many firms reconsider their strategies around being focused in London, with the centricity of the city less important with the rise of flexible or remote working. 

But has this development harmed or benefitted the insurance sector?

Massive opportunity

According to Peter Blanc, head of mergers and acquisitions (M&A) at Howden, there is a “massive opportunity” for collaboration between regional hubs and the London market to “get the very best outcome for the client”.

He told Insurance Times that work could be split, with London-based teams using their knowledge and expertise to create facilities and regional brokers then distributing products to the end client.

Blanc added that the collaboration could work along different lines, such as leveraging London market teams to access coverage unavailable in regional markets and facilitating streamlined processes for similar regional business.

“For example, if we had several hundred construction clients, we could discuss with our specialty construction colleagues in London to see if they can develop a facility for us in their markets, which we can then distribute in the regions,” he said. 

”This presents a significant opportunity and a win-win situation because it allows our London market team to utilise their knowledge and expertise in creating these facilities.”

Hobbs echoed Blanc’s sentiments, adding that the establishment of regional hubs fostered the growth and international sharing of creative ideas related to products, distribution and operational approaches within the insurance industry – benefiting customers and the UK economy.

“The markets serve different customers, different sectors and segments and different requirements,” he explained.

“[Regional hubs] are more often than not complementary, albeit competitive in their own right.” 

Challenges of hybrid working

Blanc noted that the adoption of hybrid working and technology had enhanced collaboration between regional offices and London-based firms.

He explained the advantage was found in the ability of regional account executives to pursue complex risks, as they can easily access support from London colleagues through virtual calls via video-conferencing applications. This eliminated the need to travel to London for help.

However, while Howden was looking to take on staff in different parts of the country – Blanc admitted that “one of the challenges [of this approach was] pure remote working”.

These comments followed a recent survey of 260 insurance professionals working in the London market, published by the Chartered Insurance Institute (CII) New Generation group earlier this year (2 June 2023), which found that 86% of the sector were now attending the office three times a week or less, with less than 5% now attending the office five days per week.

In comparison, pre-pandemic findings showed that 73% of staff attended the office five days a week, with another 17% attending four times.

It was also highlighted that 41% of broker and underwriter respondents found their access to mentors negatively impacted by lower levels of office working, while nearly 60% of junior underwriters and brokers reported that their on-the-job learning had been negatively impacted.

Blanc said that remote working was “fine in the short term”, but noted that Howden wanted the majority of staff to come into its offices as it trained up junior staff.

“We want to be ambivalent about where people work, but we want to create environments where our youngsters can actually learn from more experienced staff,” said Blanc.

Meanwhile, Hobbs acknowledged “the benefits [of remote working] for individuals are many – choice, work life balance, recruitment options, cost and time saved on travelling and more.”

However, he warned that “all companies need to be mindful of training and development, professionalism and company culture”.