UK regulators could prove a blocker for London’s ILS ambitions

While the ILS framework may put London in a good position to become a global hub for ILS, Guy Carpenter head of GC Securities EMEA Des Potter told Global Reinsurance that the UK regulators would have to keep pace for this to come to fruition.

Potter said: “We believe that the new ILS framework has the potential to establish London as the global hub for innovative ILS solutions; however, this will be dependent upon the extent to which the approach adopted by the UK regulatory authorities recognises the nature, scale and overall complexity of the risks assumed.”

He noted: “London has the underwriting, broking and actuarial talent to deliver pioneering ILS solutions that can address many of the key risk challenges facing the insurance industry, including closing the protection gap. However, the UK regulator must be able to provide the levels of speed and certainty required to enable the City to compete effectively with established ILS jurisdictions around the world.”

Potter believed that the proposed enhancements to existing legislation would put London in a “strong position”, and he added: “With the support of the regulator and commitment of the London market, I am confident that the City can offer a market-leading alternative for risk transfer to the capital markets.”