Insurers are vital to the competitiveness of the UK’s financial and related professional services sectors, but a report by TheCityUK and PwC UK warns that lagging insurance processes and market infrastructure threaten this position without urgent modernisation.
The report draws on insights from more than 300 senior leaders in the UK financial and related professional services industries (including 70 CEOs and chairs), as well as functional experts, academics, regulators, government, technology leaders, disruptors and think tanks. These insights are combined with PwC’s economic models and international benchmarks.
The UK’s international competitiveness depends largely on its ability to provide insurance, price and share risks at the pace at which the modern world is impacting demand, the report said.
The findings show that while overall gross value added (GVA) for financial and related professional services has been essentially flat since 2014, the reinsurance/insurance and pensions industry has grown 38% over the same period.
The analysis positions insurance as central to national resilience, underpinning everything from infrastructure and energy security to defence, technology and business investment. It emphasizes that growth requires taking risks – and insurance enables this.
However, the report warns that the UK cannot remain competitive if insurance processes and market infrastructure lag behind the risks they are supposed to manage. Fragmented data, slow customer journeys and legacy systems widen protection gaps (especially for SMEs and households) and slow recovery after shocks.
Therefore, there is an urgent need to modernize the insurance market infrastructure. This is critical both for national resilience and for maintaining the UK’s wider financial leadership. This includes insurance companies playing a key role in shaping open finance and digital identity, so key requirements around consent, detail and data use do not default to a bank-led model.
The company also noted that if the UK lags behind in digitalization and interoperability, the mechanics of doing business internationally will become increasingly difficult.
It highlights that London’s professional leadership is one of the UK’s real strengths, but it is not guaranteed. The report calls for the expansion of ILS, captive insurance and alternative risk transfers, supported by proportional wholesale regulation, predictable taxation and faster enforcement. For systemic risks such as cyber, it draws on UK precedent and points to the potential for public-private risk sharing. The report highlights that recent momentum around captive and instrument landing systems is welcome, but the pace now is important if the UK is to keep up with faster-developing centres.
Anne Richards DBE, chair of the project steering committee and chair of TheCityUK’s leadership committee, said: “The UK’s financial and related professional services sector is a strategic national asset that cannot be taken for granted. While professional services and insurance have performed well, overall growth in the sector has flattened. We are at a critical juncture. The message from industry leaders and stakeholders is clear: build on the existing positive approach, but with faster, more ambitious and targeted execution, to reform the system.
“It is more urgent than ever that industry, government and regulators act together to unlock growth and drive innovation. This is an industry that creates value for the whole economy and society. If successful, the UK will become more competitive and attractive to investment, business and talent, benefiting people across the country.”
Darren Ketteringham, UK financial services leader at PwC, commented: “Our financial and related professional services sector is built on the qualities that others strive to emulate: deep expertise, openness and a relentless ability to reinvent. It is more than just an industry in itself; it is an opportunity multiplier driving growth across the country. But our model is clear. Without substantial action, the UK financial services sector will shrink as a share of national output.
“Other financial centers are closing the gap with the UK and technology has reset the terms of competition. The position from industry leaders is clear. We must now make bold decisions about how to leverage technology to lock in a competitive advantage ahead of other financial centers that are ambitious and faster. Embracing AI, leading on tokenization and building market pipelines to underpin this will be crucial to securing the UK’s position as a leading financial center for decades to come.
“Staying ahead requires constant transformation and this is a make-or-break moment. With shared clarity and confidence in the way forward, we can unlock £53bn of economic opportunity and put the UK decisively back at the forefront of global financial services.”
Simon Westcott, head of strategy and financial services at PwC UK, said: “The financial markets of the future will operate 24/7, with lower costs of entry, instant settlement and greater opportunities for individuals and businesses. Imagine buying a house in days instead of months, automatically getting the best interest rate on your savings, or being able to invest in any asset in seconds.
“To achieve this, businesses need to invest now in the technology that will power the next generation of finance. The industry is clear: the systems behind it must work seamlessly together, both domestically and across borders. We need joint links between industry, government and regulators to build infrastructure that speaks the same language internationally.”
Lucy Rigby KC MP, Economic Secretary at the Treasury, added: “The UK’s financial services are the crown jewel of our economy. This government’s ambitious reform agenda aims to unlock the sector’s full potential, including ensuring regulation is realistic, supporting innovation and ensuring we maintain a competitive advantage. I welcome this report from TheCityUK and PwC – its urgency and ambition are shared by government and industry.”
