One-stop shop could mean even longer faces at Lloyd's: John Moore looks at the competitive threat posed by 22 companies gathered under one roof

AT 7.20am on Wednesday 7 August 1991 a fire was discovered on a floor of a new office building under construction in the City of London. More than 100 fire fighters with 20 fire engines fought the blaze, which spread rapidly up the atrium to the top floors.

Apart from immense damage, the fire also caused some embarrassment, since it had started in a building designed to house an ambitious market-style insurance community, a potential rival to Lloyd's of London. For an insurance centre to be consumed by one of the risks it is supposed to insure was unfortunate.

'I am extremely sorry to hear about the most unfortunate setback,' David Coleridge, the then chairman of Lloyd's, wrote in statesmanlike fashion to Victor Blake, chairman of the London Underwriting Centre, whose building was burned down. Lloyd's professionals were a little less respectful about the disaster.

Today, the London Underwriting Centre opens for business and the long faces at Lloyd's could become even longer, as the centre represents the biggest concentration of underwriting capacity to be established in recent years in the City.

The players in the new market are 22 subsidiaries of British and overseas insurance companies. They will operate out of 3 Minster Court, a nine-floor building near the Lloyd's market. Each floor is arranged around a 60-foot diameter atrium which contains a high speed escalator system.

The setting has been chosen in an effort to attract largely general insurance business in a market-like environment.

Underwriters from companies such as GRE (UK), Mercantile & General Reinsurance, Sun Alliance and London, Commercial Union, Eagle Star, Swiss Reinsurance and Zurich Re will be working alongside each other under the same roof.

According to Victor Blake, who started his career at Lloyd's and is now chairman of CNA International, part of the US-based CNA group, the concept had been talked about for years.

London's insurance community is housed largely in tall, inappropriate buildings erected after the war. Insurance brokers, bringing business to companies, had to spend many hours a day walking around the City to the various offices.

Brokers prefer to do 'one-stop' shopping. If they are unable to place business with one risk carrier they like to be in close proximity to another insurer so that the business can be completed. Moreover, when insurers work closely together they have access to more detailed information, which allows them to set more competitive prices and secure business that might otherwise be lost to them.

All this could not come at a worse time for Lloyd's itself, which is attempting to refinance itself just when the insurance world is beginning to climb out of its long recession.

Lloyd's hopes to attract new investors in the shape of companies, which would be expected to support the market from the beginning of this year. While much interest has been indicated, the level of support is not yet known and Lloyd's financial ability to accept risks may at best remain static, or fall as existing members continue to leave in the wake of huge losses.

'If the opening of the building coincides with an upward movement in premium rates, as it would seem to do,' says Mr Blake, 'and there is a greater use of companies because Lloyds unfortunately is unable to respond to the needs of customers, it is not unreasonable to anticipate that pounds 2.5bn of premiums which we indicate we are intending to accept will go up quite quickly.

'What we will write and what we are capable of underwriting are two different things.'

With Lloyd's still attempting to deal with internal problems caused by pounds 5.5bn worth of losses, the arrival of the London Underwriting Centre poses a serious competitive threat, particularly when buyers of insurance are looking towards markets offering sound financial security.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'