Political Risk and the London insurance market May 11, 2012Posted by Jeff Riley in : AON, Political risk, The Careers Group Blogs, london, politics , add a comment
“Political risk is a significant feature of the London insurance market, which is the world’s number one market for international insurance and reinsurance.” My interview with Caspar Bartington of the CII was going splendidly I thought. I was visiting Caspar because I’ve just started careers work with Queen Mary College, University of London and he has been there a couple of times for careers events
Why doesn’t political risk have a higher profile amongst students? There are a number of reasons. Insurance is a hidden gem – it has a perception problem that means it is misunderstood by most students. On top of that, sector employers don’t recruit in the same way as other financial companies. There aren’t, for example, as many structured placements and companies don’t attend that many careers fairs, although the CII does plenty of student sessions each year. People tend to hear about schemes and opportunities through personal and professional networks more than careers fairs and directories. Having said that, lots of students and graduates have found their way in to the profession and it is a competitive sector to break into.
So do all insurance companies have a political risk section? Many companies will have a political risk expert but only a few will have specialist teams. Aon is one such company, and indeed its graduate scheme allows some new entrants to spend six months in the kidnap and ransom division as well as other placements in more calm areas such as fine art! Aon also has a summer placement scheme so they are worth getting to know well.
Would students be at a disadvantage if they were too clearly focused on political risk as an option to the exclusion of considering other areas of the insurance business? Well I think an interest in, and knowledge of, political risk as a feature of insurance would be an excellent platform for any application. Frankly there is a low level of knowledge of the profession in general so any informed focus would be a good start. Having said that I think it would be in the students’ own interest to be open-minded about other areas of the insurance business. After all it is part of the same profession. Until they have got some practical experience it probably wouldn’t be wise to make final decisions. In any case the sector is pretty good at accommodating individual preferences so there is no need to panic about it.
One other point worth making is that the sector does recruit from a wide range of degree disciplines – the main focus when recruiting is the range of skills and aptitudes candidates can bring rather than just the subject studied.
What does political risk work in insurance involve? A real variety of things. On the one hand looking over historical data to generate a prognosis about future stability in a particular country. Emerging markets, for example, can provide growth opportunities for business but they are also more liable to be impacted by government action and supply chains are increasingly vulnerable. Issues such as unexpected nationalisation, physical damage from political violence, the cancellation of export/import licenses and default on contracts. We rely on political risk expertise to help us take these kinds of issues into account when offering insurance. They provide expertise in issues such as kidnapping and terrorism – and these days terrorist attacks are considered as a foreseeable risk. There are around 20,000 kidnappings a year and these also have to be factored in when companies are considering insurance. I know of one insurance professional who has to conduct negotiations with Somali pirates who had taken a ship that her company had insured. Of course these kinds of negotiations are carried out in conjunction with legal authorities but nevertheless insurance professionals can be involved in this kind of work.
What advice would you have for students interested in the sector? You won’t be surprised to hear that my top tip is to become a Discover member of the CII. It only costs £35 a year and will quickly help you get up to speed with the sector. Students should email firstname.lastname@example.org for full details. Membership gives free access to lots of events, such as the lunchtime lecture series hosted at Lloyds of London (who also have a graduate programme that includes a political risk element, incidentally). The most recent series of lectures included experts talking about topics like risk around the Olympics or the issues around deep sea oil exploration. These are great places to network as well.
Secondly, you should read the FT and The Economist – fairly obvious I suppose – but also the trade press such as the Insurance Times and Post.
Don’t forget you can read more on careers in political risk by searching this blog or use the search term political risk at careerstagged.co.uk
Download Aon’s latest Political Risk Map produced by Aon here