The Lloyd's Market Association (LMA) has identified regulatory reform, market cycle dynamics, war clause updates and natural catastrophe coverage as its primary areas of focus for 2026.
Arabella Ramage (pictured above), legal and regulatory director at the LMA, said the UK Government's recognition of insurance and reinsurance as potential drivers of economic growth was a notable development. The sector employs 60,000 people and forms a key part of the London and UK economy.
However, Ramage raised concerns about whether this focus would be sustained. She noted that insurance featured only briefly in the Financial Conduct Authority's (FCA) letter to the Prime Minister at the end of 2024.
The LMA has worked with the FCA for three years on reducing regulation in areas where oversight may be disproportionate. Ramage said efforts have centred on the territorial scope of the FCA rulebook and the definition of "consumer," both of which remain unresolved.
"Progress is too slow," Ramage said. She urged the FCA to "deliver these substantive reforms within the next 12 months and to honour its original promises to the LMA."
On market conditions, Ramage said the consensus points to a softening cycle following a period of hardening between 2019 and 2023. She cautioned that softer markets can lead to relaxed protections in policy wordings and fewer exclusions as insurers compete for market share.
Recent data supports this outlook. According to Oxbow Partners, property rates dropped 9% in both Q1 and Q2 2025, while net underwriting results fell 14% to £4.8 billion in 2024, down from £5.5 billion in 2023.
Analysts suggest insurers may face pressure on margins as rate softening continues, potentially driving consolidation or increased M&A activity.
The LMA will also examine war clauses, particularly the Five Powers War Clause developed after 1945. Ramage said these may require updates to address cyber warfare and other technologies not considered when the clauses were drafted.
On cyber risk, the LMA is monitoring proposed UK Government measures including a ban on ransomware payments for public sector bodies and critical national infrastructure operators. Ramage noted that cyber insurance uptake among small and medium-sized enterprises (SMEs) remains low despite growing threats.
Natural catastrophe insurance gaps will also remain a priority. Ramage pointed to the California wildfires as an example of the protection gap, with coverage availability in certain jurisdictions leaving individuals and businesses exposed.
She said the LMA supports discussions on government-backed insurance schemes and public-private models. The association also backs regulatory changes to encourage risk mitigation and improved building standards.
