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Will 2018 Spark a New Era for (Re)insurance Lawyers?

21 December 2017

by Jessica Williams

 

An Associate Director on the Oliver James legal desk, Paul Francis has been a respected expert in insurance and (re)insurance recruitment for over 20 years. In this focus piece, he shares his thoughts with us on the changing tides of legal recruitment, as we delve into a niche market expertly navigated by the team here. 

“The insurance sector has undergone great change in 2017, and we expect this to have a resounding influence over hiring attitudes moving into 2018,” comments Paul. Several macro and microeconomic factors are already at play in the process; namely the general post-Brexit commercial arena, post-Solvency II capital balancing and management issues, ongoing M&A, and the new data protection guidelines.

Brexit will undoubtedly be the biggest catalyst for change, affecting the laws that govern dozens of areas of business and UK companies at both a group and strategic operational level. There has been a rise in relocations to continental destinations like Ireland, Belgium, Luxembourg and Germany, where more stable economic environments deliver better conditions for growth. Whilst the impact at home has not yet fully materialised, it is clear there will be sustained need for expert legal guidance during this transitional period.

“In-house lawyers in particular are being challenged by this highly variable legal landscape. Where generalist understanding tends to be strong, in-house counsel doesn’t have textbook knowledge of emerging areas, leading to skills gaps within firms. To offset this, we are seeing clients provide more resource for the recruitment of ‘Brexit specialists’; that is, individuals with experience handling a fast-moving legal, tax and regulatory context.”

Elsewhere, Paul reports that the restrictive facets of Solvency II have led insurers to keep more in reserve, “limiting where and how companies invest their money.” Naturally, this outlook has fostered a sharp increase in corporate restructuring and M&A activity, as well as changes to P&L centres. “Solvency II is encouraging cautious conduct, and is a contributor to firms failing to gain a competitive advantage,” comments Paul. Indeed, traditional activity is no longer as effective in generating revenue, so lawyers are needing to get creative to flourish in a time of soft market conditions.

Meanwhile, GDPR has created new standards in best practice, tightening material non-compliance across the insurance industry, as well as others. The role of lawyers is pivotal to insurers staying focused in their approach, whilst ensuring their digital and data strategies are compliant with new legislation. “Given that the insurance sector is privy to huge reams of personal information, in-house and private practice lawyers are mapping exposure and simplifying data management to help firms effectively mitigate any risk to compliance.” By the time GDPR is implemented into UK law in May 2018, all businesses must be up to code. 

The surge in runoff acquirers has been another influencing factor over private practice and in-house undertakings. Heightened levels of divested business are affording opportunities to economise without heavy loss, while a subsequent increase in corporate work means many insurance companies are rediscovering the benefits of these business models. By concluding rather than pursuing policies, runoff insurers generate scope for share allocation and due diligence projects; in this heavily regulated sector, such activity creates a constant flow of regulatory work.

Despite what may seem like cacophony in the market, the nature of the lawyer’s role remains surprisingly consistent: to keep companies on track in realising and protecting core business interests. In Paul’s view, “compliance is critical; our client businesses must stay at the cutting edge of regulatory change if they are to transcend this time of industry uncertainty. Together, we project these two areas will underpin the bulk of legal recruitment activity in (re)insurance in 2018.”

For further insights on the legal sector, please contact Paul Francis on +44 (0) 203 861 9188, or paul.francis@ojassociates.com

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