The City of London is one of the world’s most important financial centres, especially when it comes to insurance. I’m not talking about the general insurance market (covering cars or health, for instance), but the global one for large business-insurance policies and reinsurance. This type of insurance is the oil that keeps the wheels of the global economic machine moving. Without it, trust would dissolve and the economy would be far more volatile.
The Global Cities Report of 2021 notes that London is the only city in the world where every top-20 insurance and reinsurance firm has a base. The insurance sector comprised 24% of the City’s GDP in 2020, according to the London Market Group, which represents insurers and reinsurers. And at the heart of this network is the Lloyd’s of London insurance market.
The oil in the world economy’s motor
All insurance policies are, in the most basic sense, a transfer of risk. For a fixed fee, or premium, I can buy an insurance policy, which will pay out when a certain event occurs. The insurer will try to price the premium correctly based on the assessment of the potential losses and probability of the event playing out. In theory, if the insurance company has done its sums right, the total amount received from customers in premiums every year
