“Glocalisation” – thinking globally, acting locally

2007 saw significant expansion of Ascot’s global reach. We have opened offices in Singapore, Houston, and Spain in an effort to best serve our customers and continue to grow our business. Key to the success of this expansion is to work on even more levels with our broking partners to create mutually beneficial opportunities in new markets.

 

The business model of the Lloyd’s Broker community has changed beyond recognition compared to thirty years ago. Their clients have increased in scale and geographic diversity and it has become easier for brokers to place business remotely in all corners of the world. As world-wide broking networks develop, the major London brokers have been snapped up by global groups or created groupings around themselves, opening placing offices in the USA, Australia, Bermuda, Singapore etc.

 

Traditionally Lloyd’s Brokers acted as the marketing arm of Lloyd’s syndicates and the Underwriters were able to pick and choose from the slips brought to the Box. The system relied on the Lloyd’s brand and the individual’s relationship with key brokers. Meanwhile, Lloyd’s underwriters’ competitors, the big insurance and reinsurance companies, and notably the new entrants from Bermuda etc., spread their reach to have worldwide distribution. 

 

So while broker - underwriter relationships are still paramount, they increasingly need to be viewed on the global level at which brokers and their clients now operate. Clients can and often do demand that their business be offered to locally based carriers first before being offered to London and other international markets.  Response times, costs, knowledge of language and customs and personal relationships all play a part, along with a sense of supporting or benefiting from local economic initiatives aimed at developing local expertise. There are also significant, attractive books of business that will just never be brought to us by London brokers, be it part orders where the London commission would be uneconomic, or medium sized business absorbed in the local marketplace.

 

Singapore, where we opened our first office, is a classic example:  We will not see consistent quantity or quality of business from South East Asia and the vicinity if we rely on the flow of business to London alone. The regional MD of a major global broker described Lloyd’s and the international wholesale markets as being at the bottom of the food chain for business from a local perspective, citing the case of a major property risk where the London / European share of the programme reduced from 78% in 2002/3 to as little as 28% in 2005/6. In spite of the massive growth in Asian economic activity and insurance premium spend from 2002 to 2006, the premium income derived by the Lloyd’s market from Asia actually declined slightly. However, the amount of business written by local indigenous reinsurers increased by around one third, to more than five times the amount of business now placed in Lloyd’s.  

 

Regional hubs have sprung up elsewhere in the world. In Houston, for example, local capacity for downstream energy risks is reported to be near $1 billion, benefiting from increasing amounts of catastrophe aggregate. With the growing availability of capacity worldwide, pure London placements generally now consist of only the largest and/or complex layered risks or “distressed” risks with high risk occupancy, catastrophe exposures or poor loss records.

 

Through a process sometimes described as “glocalisation” London is now Ascot’s own hub within a gradually and selectively growing network of regional offices: “thinking globally, acting locally.” Our future lies in developing our book with our major broker partners as far as possible to best serve our existing client base and benefit from additional local opportunities in some of the rapidly-growing markets worldwide.