Lloyds and the London market were perceived to be virtually one and the same; the company market was still described, albeit anachronistically, by that time, as “the fringe.” The term e-commerce had not entered the language, and e-mail had still to arrive as a commonly used business tool.

We are now in a different age. The changes to our industry are already well known, but for London they have meant a fundamental cultural adjustment following changed ownership, the forces of globalization (including the creation of the European Union single market), and the arrival of e-commerce. In the late 80s, people in London regarded overseas insurers and reinsurers, collectively, as a threat and a competitor.

Today, to a very large extent, these former overseas competitors make up the London market. And they have meant a welcome infusion of capital, discipline and expertise.

The modern company market, represented by the International Underwriting Association, is dominated by overseas capital. Lloyds, as a recent report from Swiss Res Sigma pointed out, is rapidly evolving into a second London company market. Again, the supporting capital is located increasingly outside the United Kingdom.

In that sense, the London insurance market is like its banking counterparts in Londons financial center. Just as there are said to be more Japanese banks represented in London than in Tokyo, so the City plays host to all the worlds major international insurers and reinsurers.

All this is healthy. Indeed, if London depended on U.K. capital alone, it would be a shadow of its former self. The process has, however, not been without pain. When the London Insurance and Reinsurance Market Association (a predecessor organization to the IUA) voted in 1996 to allow insurers and reinsurers based outside the United Kingdom to become members, the move followed years of soul searching.

There was strong opposition, especially from junior and middle management, who saw it as consorting with the enemy. Now it is hard to imagine what all the fuss was about.

E-commerce was at the heart of the debate. By giving membership to insurers and reinsurers based outside the United Kingdom, LIRMA also gave them access to its back-office bureau facilities. This made it relatively easy to close deals and process claims electronically without necessarily having a physical presence in London. And e-commerce has, even more than changed ownership, altered what is meant by the London market.

Although we may be frustrated by the speed at which our industry adopts electronic trading, e-commerce has crept up on us by stealth. E-mails are now used routinely across national boundaries.

The Ins-sure Services Ltd.s back office bureau in London handles a growing number of risks and claims on an international basis. Video conferencing is becoming routine. Location is increasingly unimportantand we have only started to exploit the potential of the Web and of shared market information repositories.

The subscription market (risk syndication) increasingly crosses international boundaries, and it is now common for risks to be placed in several different locations at onceglobal brokers placing risks for global clients with global capital providers. When a reinsurer accepts a risk, the decision may have involved discussion between underwriters and managers in several different locations.

In this environment, there is a growing split between capital and expertise. There may be good administrative and tax reasons to locate your capital in, say, Bermuda, your head office in mainland Europe, and your main underwriting and claims expertise in London. No two companies follow precisely the same model.

It is, therefore, increasingly difficult to define what is a London market risk or, indeed, what you mean by the term at all. The London market, which grew up as a place to meet to conduct international insurance business, will become an increasingly virtual concept.

Does that mean that the streets of Londons insurance district will become deserted? Not at all. You only have to look at the amount of new office building by insurers and reinsurers to appreciate that this corner of the City is going from strength to strength.

As long as our industry needs human capital, it makes sense to locate it in one center. London remains the home of an astonishing and growing range and depth of insurance and reinsurance expertise. E-commerce, far from threatening its future, is making it more accessible.

Marie-Louise Rossi is chief executive of the International Underwriting Association in London.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 2, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.