Monday, November 24, 2008

Unless you've spent the last twelve months in a cave somewhere in Outer Mongolia, you won't need me to tell you about the woes that have afflicted the global economy. Every day there's yet more gloomy news from the City and as the recession begins to bite, this is more and more about jobs being lost, particularly in Financial Services.

So, what is it like to work in Financial Services in the City at the moment? Well, if you were to ask a banker or stock market trader you may well get a very different answer to the one I'm going to give.

You see, there is one sector within Financial Services that may not be staring into the abyss in quite the same way as the others. And it happens to be the one I work in.

Lloyd's had its own problems in the early nineties and since then has cleaned up its act considerably when it comes to dodgy dealings and the like, so the market is in the right kind of shape to weather the current storm. Of course, it doesn't hurt that when the economy hardens, insurance rates (premiums) tend to go up because the competition in the market drops off. And because it doesn't necessarily follow that claims will increase, it can be a lucrative time to be in the industry. As long as you don't insure a large percentage of the American mortgage market against defaulters, of course.


Blue Witch said...

Don't a large proportion of city bankers have redundancy protection? Iknow it's only a tiny fraction of he insurance market, but it will be a cost.

Isn't there evidence that in more troubled times there are a greater number of fraudulent, or frauduently inflated, insurance claims? (although, these days, with domestic insurance at least, unless you have a receipt for original purchase you don't get paid out for any losses anyway...)

Dave said...

While both of those may be true, the real cost to the London Market comes from major catastrophes such as Caribbean hurricanes and massive flooding closer to home. Mercifully, those don't happen any more frequently when times are bad.