Wagstaff warns of labour shortage in London market

THE London market could face a serious shortage of younger workers within a decade, as firms freeze hiring while they evaluate the impact of artificial intelligence.

Speaking to Insurance Day at the Rendez-Vous de September in Monte Carlo, London Market Group (LMG) chief executive Caroline Wagstaff said the industry has cut hiring of graduates and apprentices by a fifth in the past year.

Firms have imposed a “hiatus” on hiring in the expectation that AI will affect the shape of their labour force, even though they are not yet sure exactly how AI will change their operations, she added. The current soft market exacerbates the problem, since firms typically reduce hiring under such conditions anyway.

“And the problem is that when you roll that picture forward a decade, what that tells you is we’re going to have a real dearth of people under 30 in the market, and then my question to businesses is: who’s running your business 10 years after that if you’ve got no under-30s?” Wagstaff said.

Presently, about 24% of the London market workforce is under 30. By 2036, that could fall to 7%.

Wagstaff said the LMG is undertaking recruitment, apprenticeship and publicity programmes to boost young people’s interest in London market insurance. The group is focusing on recent secondary school graduates to create a pool of potential recruits.

“But there’s no point if no one’s going to hire them at the end of it,” she added.

Corporate leaders and experts have offered differing assessments about how AI might affect demand for new workers and the composition of the insurance workforce. Some have argued that wholesale insurance operations — the core of London market business — are too complex for AI to substitute for specialised underwriting and advising tasks.

However, commercial insurance firms in other markets have said AI has motivated them to undertake major programmes of layoffs. In July, Allianz said it was cutting between 1,500 and 1,800 positions in Europe, though primarily in routine retail and customer-service positions.

US Acrisure announced in May that it would reduce its headcount by 11%. In justifying the move, Acrisure said: “Leveraging technology must be the core of how we operate, how we grow, and how we deliver value to clients every day.”

In March 2026, Chubb chief executive Evan Greenberg said AI could lead to layoffs, at least in some parts of the business, though he added that other units could add new staff.

Regulatory picture is favourable

Wagstaff was much more optimistic about regulatory matters. The UK government running a consultation on creating a specialised law on captive insurance. Parliament will soon consider the next Financial Services and Markets Act, which will include text that will make it easier to offer insurance-linked securities (ILS) in the London market.

Wagstaff said the Lloyd’s market has seen a growing volume of ILS activity in recent years, with close to $3bn in capital passing through London Bridge 2. However, the wider London market has not taken much advantage of ILS structures.

For several years, LMG has pushed the UK authorities to develop a concierge service for new investors in the financial services sector. The Office for Investment: Financial Services (OfI:FS), a joint project of the UK Treasury, UK financial regulators and the City of London Corporation, opened last year. Wagstaff would like to see a parallel service offered to new domestic market entrants.

The LMG has been pursuing its financial reform agenda for several years, during which time the Conservative Party lost power to Labour in the 2024 general election. Wagstaff said she was pleasantly surprised that Labour continued to pursue key reforms like the new captive insurance law with the same vigour as the Conservatives.

“The latest financial services and markets bill… really illustrates that they’re still building on those foundations for greater proportionality, simplification, really making life as easy as possible, but without dropping standards,” she said.