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Chapter 9 Reinsurance market 9/9

The non-Lloyd’s London Market was estimated to have been worth £16.034bn in terms of gross written
premium income in 2016 according to the IUA’s latest figures, set out in its London Market Company
Statistics Report 2017. Adding £6.691bn of gross written premiums controlled by the London company
market but written elsewhere gives a total of £22.725bn which rivals the latest figures declared by
Lloyd’s of £29.86bn for 2016.
Governance
A company limited by guarantee, the IUA is governed by a board of up to 20 people, consisting of the
IUA is governed by a
chief executive and representatives elected annually by rotation by its full membership. Those so elected board of up to 20
tend to be chairpersons and/or chief executives of insurance and reinsurance companies or other senior people
market figures. A number of standing committees oversee the main work of the association and report to
the board.

Table 9.2 shows the three categories of membership available within the IUA.

Table 9.2: Categories of membership
Ordinary Denotes full membership status with voting rights and an active involvement in the governance of
the association. Ordinary membership is open to international and wholesale insurance and
reinsurance companies operating in or through London.
Affiliate Caters for London Market companies which are either in run-off or which provide professional
services to the association’s Ordinary members.
Affiliate membership offers the benefit of the IUA’s information services without the burden of
supporting other services aimed directly at active London company market insurers and reinsurers.
In addition affiliate members may also, where appropriate, take part in the IUA’s committee activity,
but have no voting rights.
Associate Open to insurance and reinsurance companies outside London. Associate members may attend the
association’s annual general meeting, but have no voting rights. They receive a basic publication
service.

Question 9.4 Reference copy for CII Face to Face Training
Is the IUA empowered to comment on premium rates and renewal negotiations?

B2 Continental European markets

At the core of the European reinsurance markets are the professional reinsurance companies. Once, the
largest of these were to be found in Germany (where the oldest existing reinsurance company, Cologne
Re, now part of General Re, still operates), Switzerland and France.
Regulation
With the implementation of the EU Reinsurance Directive in 2005, the introduction of ‘home state’
regulation reformed the traditional corporate structure of a reinsurer from one with an EU holding
company with separate legal entities incorporated wherever business was written into one where a
single EU company writes business through a network of branches, having been granted a passport by
its ‘home state’ supervisor to trade throughout the EU. The Directive also heralded the arrival of the
Solvency II legislative programme, implemented on 1 January 2016.
Solvency II introduced a new, harmonised EU-wide (re)insurance regulatory regime into all Member
Solvency II introduces
States. It replaced the existing thirteen EU insurance directives (including the EU Reinsurance Directive) a new, harmonised
and has as its four objectives: improved consumer protection, modernised supervision, deepened EU EU-wide Chapter
(re)insurance
market integration, and increased international competitiveness of EU (re)insurers. The Directive is regulatory regime 9
based on a three pillar approach shown in table 9.3.

Table 9.3: Three pillars

Pillar 1 Requires (re)insurers to demonstrate that they have adequate financial resources. All reinsurers are
required to maintain reserves and, in accordance with two solvency requirements (namely, the
solvency capital requirement (SCR) and the minimum capital requirement (MCR)), capital and to
comply with certain rules on investment.
Pillar 2 Deals with governance, internal controls and risk management processes.
Pillar 3 Deals with public disclosure and regulatory reporting.