By Jeffrey A. Newman Esq. MBA
On March 11 of this year, the South China Morning Post with the headline “HK has edge over London in marine insurance cover” The article states that Hong Kong is set to challenge London’s dominance in marine insurance as Middle East tensions highlight the city’s ability to provide war risk cover at a lower cost, accotding to the chairman of the insurance regulator.” I preface this blog by saying that I am not an insurance expert or an economist, but in my business as a lawyer, I read a lot about the stock market, about corporations, and I analyze corporate financial statements for accuracy for a living. That’s part of my daily work as a whistleblower lawyer. Hence, I am fact-checking on this topic.
Kevin Walmsley lives in China and writes about business there. I try to read his blog each week. I think he has a unique perspective as an American living in China, but he has also recently suggested that the maritime insurance industry has shifted from London to China. His core thesis appears to be that China dominates physical production and logistics, but it still pays a lot for Western business services such as banking, insurance, and trade finance, and that Beijing now has a deliberate strategy to internalize more of those services. He suggests that as China builds out its own financial infrastructure outside Western regulation, the trend in banking and insurance looks favorable to China. That’s a far cry from stating that the maritime insurance industry has already relocated to China.
The International Union of Marine Insurance (IUMI) has confirmed that China has become the second-largest provider of hull insurance globally and has overtaken Lloyd’s market on hull premium share. However, while Lloyd’s premium shares declined, Chinese hull premiums rose, reflecting an expansion of Chinese shipowners and shipbuilding. The IUNI notes that when you combine Lloyds with the broader London company market, London still has the largest market share among single geographical locations. It may be that premium volume is shifting towards China as its fleet and trade grow, the London marine market is still central. Additionally, reinsurers such as Munich describe the global marine market as highly international. So is Walmsley correct? That depends on how you interpret his statement that “shifted from London to China .” That statement is too strong based on the current data that I have read. London remains a leading marine insurance center, especially when you aggregate Lloyds and the wider London market.
With the major conflict in Iran, especially regarding oil flows through the Strait of Hormuz, it is easy, I think, to extrapolate beyond the facts to what is inaccurate. The ramifications of publishing conclusions, which may be rough predictions, extend to public markets and public perceptions. Headlines matter a lot. To state that there has been a complete displacement of London rather than a contested transition with overlapping systems is not correct.
Jeffrey Newman, JD, MBA, is a whistleblower lawyer whose firm represents healthcare fraud whistleblowers and whistleblowers reporting violations of export controls, tariff evasion, money laundering, and other WB cases. Mr. Newman and his staff also represent many physician whistleblowers in healthcare fraud cases. Whistleblower laws in the U.S. allow individuals with information about export control violations or tariff fraud to report it under the False Claims Act. The Firm’s website is www.JeffNewmanLaw.com. Attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 978-880-4758. For other blogs see: http://JeffNewmanLaw.com
