Competitive environment for captive insurance companies
Oliver Lodge asked a question of the Chair of the Policy and Resources Committee concerning the provision of a competitive environment for captive insurance companies.
Responding, the Chair advised that she was speaking regularly to the CEO and Chair of the London Markets Group (LMG), who were leading and co-ordinating industry efforts to build the onshore captive insurance market. The LMG had had constructive recent meetings with HM Treasury and the Financial Conduct Authority on this issue, including with Ministers, and would be consulting the industry shortly with a view to submitting formal proposals for the legislative and statutory changes required to build the captive insurance market. This would be in the context of Government’s consultations on the future of the Solvency II regime.
She added that the LMG had welcomed the City Corporation’s interest and offers of future support on this issue and had indicated that they were happy with the current direction and pace of travel with Government.
Oliver Lodge asked a supplementary question, concerning the City Corporation’s role as the principal supporter of the Financial and Professional Services (FPS) sector and the need to involve Members more effectively in the creation of an economic development strategy, with a view to ensuring the City remained the most attractive domain for FPS businesses.
The Chair agreed that the City Corporation should focus on making the City as competitive and attractive as possible and suggested that this was achieved most effectively by listening to what the sector needed and ensuring this was reflected clearly and practically to Government, where the City Corporation was aligned. In this particular instance, LMG was taking the lead and doing just this, so she suggested it would be most appropriate for the City Corporation to support them in this work. In relation to a query concerning the City’s own captive insurance arrangements, she advised that this would be a matter for the Finance Committee.
Alderwoman Sue Langley asked a supplementary question, seeking clarity on the international element in supporting insurance and how the City Corporation was helping London win new business and stay competitive. She also queried the impact of Brexit on insurance, particularly in relation to the shape of post-Brexit regulation, and what the City Corporation was doing in this area.
In reply, the Chair noted that the London market was a truly global one, with more commercial business now written in London from the US and Canada than from the UK and Ireland. As such, securing and maintaining investment would be crucial for the future. The US was the key partner in this respect and the role of the dominant US brokers Aon and Marsh in bringing US and global business to London was central to the City’s competitiveness. The Chair outlined the regular engagement with Aon and Marsh, as well as the relationships with other US and European firms who were important investors in both the London market and the retail sector. Further afield, through the Lord Mayor’s programme, the City supported UK retail firms such as Prudential, Aviva and BUPA build their business in China and other developing markets in Asia, Africa and the Gulf.
With reference to the impact of Brexit on the London market, the Chair suggested that this was likely to be mixed. Lloyd’s had established a new platform in Brussels and were confident that Brexit would have limited impact on their volumes and business models; however, for the non-Lloyd’s market, it must be acknowledged that firms needed to plan for no-deal and that business had been lost, with nearly 60% of EU premiums previously written in London having returned to local markets. However, this had been compensated to some degree by gains in new business from other markets, including indeed from European investors in London building their non-EU business in the US and elsewhere. An equivalence regime, which the City Corporation continued to press for, would help stabilise and regrow the remaining EU business and retain EU investment in the London Market. The Corporation was speaking regularly to the Association of British Insurers (ABI) about the challenges that Brexit posed for the UK retail sector.
The Chair also referenced the Chancellor’s intended full-scale review of Solvency II, the EU Directive covering insurance which formed the basis of the current UK regulatory regime, advising that the ABI and major UK retail firms had requested reform of several aspects. For Lloyd’s and the London Market the priority would be to keep close enough to the EU’s evolving regime to maintain equivalence.
Replying to a supplementary question from Deputy Jamie Ingham Clark, the Chair agreed with the principle that building a strong market in the UK for captive insurance would require a competitive environment, with the right coverage and technical support available at the right price. With reference to the City Re captive, she noted that this had been established by the Finance Committee and any decision to move it from Guernsey to London would be made by that Committee.
In response to an additional supplementary question from Deputy Jamie Ingham Clark on linking insurance to the City Corporation’s work on green finance and COP26, the Chair noted that insurance firms had large volumes of data and expertise about climate modelling, including the financial risks for business and communities through climate change. The City Corporation was looking to integrate that expertise into the workstreams leading towards COP26 in Glasgow, whilst also working with insurance firms as major asset managers to transition their asset allocation towards Environmental, Social and Governance) principles, underpinned by the Taskforce on Climate-related Financial Disclosures.
The Chair added that the City was also working with the Department for International Trade on a virtual Resilience Summit to take place in March, followed by a face-to-face event later in the year on the road to COP26. This would focus on the role insurance can play building climate resilience, especially for vulnerable communities.
Planning process review
Graeme Harrower asked a question of the Chair of the Policy and Resources Committee in relation to a recent planning application concerning 150 Aldersgate, urging that the decision be referred to the Court and also calling for a wider review of the planning process. This was particularly in view of the fact that the City Corporation was the freeholder of 150 Aldersgate but that the Corporation’s financial interest in the outcome of the application had not been disclosed in the report presented to the Planning and Transportation Committee.
The Chair opposed the implication that the application had been considered on an improper basis, observing that redevelopment by long leaseholders of City Corporation freehold property was very common and that, where there were such planning applications submitted by long leaseholders, the City Corporation’s freehold interest was not a material planning consideration. Therefore, the Planning and Transportation Committee could not lawfully take it into account and this was why this type of interest had not been included in the report presented to the Committee. She expressed reservations as to whether doing so in future would be lawful and noted that it would be unhelpful to tell the Committee of an irrelevant fact, only to then tell them they must disregard it. However, she undertook to speak further with the Chair of the Planning and Transportation Committee and relevant officers on this issue.
Having looked at the legal advice, the weight of documentation presented to the Committee, and length of time given to discussion of the application, she was satisfied that the planning process had been followed fully. She added that the Planning and Transportation Committee would be looked at as part of the Lisvane Review and Members would have the opportunity to make their views known there.
Graeme Harrower asked a supplementary question, in which he advanced the role of protocols and procedures in raising standards above the minimum threshold required by the law and asked the Chair to recognise that the City Corporation should aspire to meet a higher threshold, thereby obtaining public confidence. Replying, the Chair did not accept that the current planning processes were deficient, noting there was a detailed planning protocol with careful advice and she had every confidence in the Planning and Transportation Committee’s application of the proper processes.
A supplementary question was asked by Tijs Broeke, who suggested that it would be helpful for those Members who did not serve on the Planning and Transportation Committee to be provided with a better understanding of the process and extent of deliberations in relation to the planning application in question. Through a second supplementary question, he also sought clarity as to the paperwork and information provided to Members ahead of decision-making. Responding, the Chair advised that the Committee first heard from officers who presented the scheme in detail, then from five objectors, following which the committee members had a chance to ask questions of the objectors. The applicant then addressed the Committee and answered several questions of Members. The Committee then moved to ask questions of officers and express views in relation to the application, before a motion to move to the vote was put, seconded and approved by a majority of the committee. Upon the substantive motion then being put, the Committee resolved by majority to grant planning consent. The Committee had been considering the item for over 1 hour and 40 minutes when it was put for decision. The Chair also confirmed that the report for pre-reading was 281 pages long, with additional letters also circulated to the committee.
Through two supplementary questions, Marianne Fredericks suggested that it was the substance rather than the length of debate that was important, highlighting that the termination of debate was precipitate and prevented proper questions to and answers from planning officers, adding that there had also been interruptions and delays caused by technical issues. She sought the Chair’s view on a wholesale review of the Corporation’s planning processes, which she argued was imperative to restore public confidence and to address Lord Lisvane’s observations of deficiencies through his recent review. In reply, the Chair commented that the planning protocol had only recently been reviewed and updated and reiterated her confidence in the City’s processes and in the Planning and Transportation Committee. Whilst accepting the importance of restoring confidence to any regime where it was lacking, she cautioned that this was a highly regulated area and concerns should be addressed in the proper way through the Lisvane Review process. She added that she would be happy to meet with concerned Members in meantime to discuss particular issues.
Alderman Prem Goyal asked two additional supplementary questions in relation to the City’s Planning Protocol and the particularly salient elements of it, asking in particular what elements had been recently updated to ensure full compliance with good practice and the law. The Chair provided a summary of the Protocol in response to indicate its comprehensive nature and which, along with planning law, allowed the City to discharge its functions in a fair, effective and lawful manner. She added that the Planning Protocol ran to 24 pages of rules and regulations, all of which were designed to ensure the highest standards of conduct and probity at all times, adding that it had been updated only recently following debate and approval by both the Policy and Resources Committee and the Planning and Transportation Committee in the light of the Holocaust Memorial judgement and also to make any member meetings with applicants, objectors or other stakeholders even more tightly regulated, so as to preserve trust in the planning system.
Motion – That, pursuant to Standing Order No.2, Standing Orders No.13(6) and 13(9) be suspended to allow for debate to continue.
Upon the Motion being put, the Lord Mayor declared it to be lost.