New year, new shape of the City for insurers

At the start of the Covid-19 pandemic - when the Square Mile’s streets were reminiscent of the opening scenes of 28 Days Later - there were plenty of predictions of a steady decline in the status and size of general insurer’s offices in the City in the coming years.

Back in 2020, at the height of orders to “Stay at home, protect the NHS, save lives”, Gallagher forecast about 18 million square feet of office space for all businesses could become redundant by as soon as 2025.

But looking at the London skyline today – plus the number of removal vans ferrying furniture around the Square Mile’s streets – Gary Fitzpatrick, chief commercial officer of Keoghs, observes these predictions now seem “possibly exaggerated and certainly premature.” 

Fitzpatrick says far from forcing insurers to shut up shop for good, Covid seems to have simply accelerated and surfaced a myriad of questions about the office space providers occupy that were already simmering. 

Today, he says: “It feels like the City has fast-forwarded to a state that was always on the horizon.” 

Jamie McDonnell, London Market lead at Guidewire, observes top level talks among insurers about whether to stay in the Square Mile or go have been shaped by Lloyd’s debate during the pandemic about whether to remain in Lime Street. 

Coffee time

Lloyd’s presence has long been seen as a physical mark of the way the UK insurance market operates.

It was back to 1686 that Edward Lloyd turned a coffee shop into a place where seafarers, merchants, and shipowners would exchange information about the movements of ships and trends in world trade so that they could obtain insurance.

After occupying several buildings over the next three centuries, in 1986 Queen Elizabeth II opened the internationally renowned Lloyd’s building, which was designed by architect Richard Rogers, who was tasked with producing a structure that would last into the next century. 

Rogers’s modern design placed staircases, lifts, lobbies, toilets, and water pipes on the outside of the building.

Initially slated by critics, who claimed the building looked like a sawn-off power station, it has since won plaudits for features such as the atrium, which has a painted latticed steel and glass barrel-vaulted roof that, during trading hours, bathes the Underwriting Room in natural light.

Despite being recognised today as a London landmark, even prior to the pandemic, the move away from a high box presence towards carriers welcoming brokers to their offices had some questioning whether Lloyd’s should leave Lime Street. 

In 2021, few eyebrows were raised when Lloyd’s reached out to 60 senior leaders in the industry to ask about how they wanted to work moving forward.

The research revealed an in-person trading environment was still seen as critical to the success of insurance in the City.

As a result of that feedback, talks then took place between Lloyd’s top brass and Ping An, which has owned the Grade I listed building since 2013.

After more than a year of negotiations, it was recently revealed that the world’s most prominent insurance industry marketplace will now remain in Lime Street until at least 2035 with Ping An investing £20m to make the building more energy efficient.

When the decision was announced on the 18th December last year Lloyd’s chairman, Bruce Carnegie Brown, said: “The Lloyd’s building holds a special place in our market’s collective consciousness. The changes we’ve made to the ground floor this summer signal the start of our ambitions – but there’s more to come, and we’ll be redesigning other spaces in the Lloyd’s Building to support our market’s collaboration and innovation.”

Mark Huxley, consulting special adviser at Altus Consulting, says the decision by Lloyd’s to stay put shows: “What will continue to change is the optimisation of working environments to maintain the personal contact but in a digital era, equipping the spaces with the right tools to trade.” 

He also wryly observes it also highlights that the one consistent requirement for insurance ever since 1686 is access to “good coffee, of course”.

Aviva’s long association with Eighty Fen

Aviva’s Hand in Hand (the insurer’s earliest constituent) register shows the provider insured new address 80 Fenchurch Street when George III was on the throne. 

Policy 87678, taken out on 19 July 1771, insured a workshop at 80 Fenchurch Street, which belonged to cooper John Hooke.  

Insurance was taken out by Jasper Brett, who is believed to have been Hooke’s brother-in-law.  Back then, 80 Fenchurch Street was a two-storey wooden structure with lofts and was insured for £200.  

Hand in Hand continued to insure the building, which later became the workshop of a coach-maker named Lambert, until 1827. 

EightyFen, the building on the spot today that Aviva moved into just before Christmas, contains 240,000 square feet of office space across 14 floors, along with 12,500 square feet of retail space. 

 

Fresh future

Like Lloyd’s, all insurers that Post spoke to were fully committed to making sure coffee continues to flow in their headquarters in 2024, yet unlike Lloyd’s some weren’t sticking with the London landmarks they have long been linked with.

At the end of 2023, Aviva moved out of the St Helen’s building – or 1 Undershaft, as it is known by delivery drivers.

It was Aviva’s predecessor, insurer Commercial Union, which built St Helen’s, one of the City’s first skyscrapers when it was constructed back in the 1960s.

Given the history of the structure Aviva’s move, just before Christmas, resulted in Amanda Blanc, group CEO of Aviva, remarking on LinkedIn that exiting St Helen’s was “a sad day and one I always knew was coming”. 

Showing how bricks and mortar can enter your soul, Blanc noted her 24-storey tall “working home” was “a building stacked full of memories that has been an ever constant wherever my travels took me”. 

After Commercial Union bought the site in the early 1960s, Aviva – under many past guises, including Norwich Union – used the building as a HQ for more than half a century, even after it was sold off decades ago.

In a post that has generated thousands of likes plus comments, Blanc observed St Helen’s had kept the insurer’s staff “safe for decades” even when, in 1992, it was heavily damaged in the Baltic Exchange bombing carried out by the Provisional IRA.

Over the years she has housed tens of thousands of City workers who were proud to look up and smile as they walked across her unique atrium and through her glass doors to the best office reception in the land.

Amanda Blanc on St Helen’s

Blanc said: “Over the years she has housed tens of thousands of City workers who were proud to look up and smile as they walked across her unique atrium and through her glass doors to the best office reception in the land. 

“Throughout all that time she watched on while her much younger siblings in the Square Mile grew taller and taller around her, now looking down upon her but still with the admiration and respect that she was one of the first of her kind in London.”

While clearly visible in shots of the City skyline in 2003 Christmas classic movie Love Actually, today St Helen’s is dwarfed by neighbour Swiss Re’s Gherkin and Aon’s Cheesegrater structures.

It is telling that Aviva has chosen to move on to clearer views, just around the corner in 80 Fenchurch Street.

Blanc observes that despite the emotional pull of the history of the St Helen’s building she must look to the future.

Aviva’s next half century will have to be elsewhere, she says, pointing out: “The second ‘old lady of the City’ [St Helen’s] is scheduled to be redeveloped and will stand as tall as The Shard, ready for another 50 years of service.”

In the coming years, St Helen’s will become just a memory as planning permission has been granted for the Trellis Tower, which will house up to 10,000 workers and which, upon completion, will be the tallest building in the City.

So, Blanc ended her LinkedIn post looking ahead to occupying 80 Fenchurch Street observing it is “modern, purpose built, fit for the people we are.” 

Her view was reiterated by an Aviva spokesperson who pointed out the new head office will provide a more energy efficient, modern working environment with much better facilities” than the old HQ.

Greener buildings

Like Blanc, many insurers recognise the race to net zero is a key consideration when it comes to selecting a new roof for employees to work under.

Greer Stead, head of marketing at Chaucer, says post-pandemic, her business took the conscious decision “to make our office much more than just rows of desks” and ensure it was line with the organisation’s environmental, social, governance programme.

Stead says Chaucer moved into The Scalpel, or 52 to 54 Lime Street as postmen know it, in October 2021 because the business “wanted a modern office space which is more attractive for colleagues, clients and brokers and carried the best credentials for a sustainably built space.” 

The Scalpel runs off 100% renewable energy and this, along with many other initiatives relating to energy consumption, play a large part in ensuring Chaucer will become carbon neutral across operations by 2030 or sooner. 

Stead says: “That ESG commitment is important to a lot of our colleagues and brokers that we work with.”

Wow factor

As well as what is powering the building, the kind of facilities, acoustics, art and architectural features contained within it were seen as a key consideration by insurance executives tasked with finding office space post-pandemic.

For Stead, “less obvious things like the staircase that was built into our office space, which is an important feature to allow the flow of colleagues enabling foster day-to-day and informal interactions” drew Chaucer to The Scalpel.

She says: “Our office also supports a charity for young artists. We display pieces from these artists in the office. That helps to support local causes and give back to the community as well as contribute to a pleasant work environment for our colleagues.”

Colleague feedback on what it would take to encourage them back onto packed public transport has helped shape many a general insurer’s City headquarters post-pandemic.

Space for collaboration and socialising were two of the main reasons Chaucer colleagues cited for coming to the office in the hybrid world. 

Clearly the kind of memories general insurance workers expect to make inside the HQs of players today look set to be very different from those of claims handlers, brokers, and underwriters closer to retirement than the start of their career.

Tellingly Blanc’s post about exiting St Helen’s prompted recollections from past colleagues of knowing where you stood in the hierarchy of Aviva based on what floor you sat on, desks covered in paper, The Underwriter pub downstairs, plus views of Concorde’s final journey.

The descriptions of today’s freshly kitted out insurance HQs make the offices sound more like five-star hotels than the tower blocks featured in 1980s financial services-focused films like Working Girl and Wall Street.

Providers say the buildings they have selected and what is contained in their HQs today reflect the expectations of Generation Z and Millennials, who will make up the bulk of the industry’s workforce in the coming years.

When RSA moved from 20 Fenchurch Street to 22 Bishopsgate in October 2022, Gerry Campbell, director of corporate real estate at RSA, observed the insurer’s new home was selected as it is “the next generation of tall buildings”.

Campbell pointed to the “game changing levels of service, a variety of catering options from grab and go lunches to a full dining experience, a bar, gym, super bike and running facilities and it even has a climbing wall” as getting RSA to sign on the dotted line to move into 22 Bishopsgate.

He says: “The building also has fantastic hospitality, meeting, and events space, fitted out with the best media technology that we can just book as and when we need it. Not having to accommodate these within our specific office was really helpful.

“We were extremely proud to open the office up and welcome our people in and I must say that there was an overwhelming wow factor as people arrived. A year on, we still get amazing feedback from visitors, brokers, clients, and our colleagues from Canada.”

To win the talent war and attract employees sick and tired or train strikes derailing their plans to get back into the City, insurers recognise employees want to work in a building with an address that impresses friends, families, and rivals at other businesses.

Aki Hussain, group chief executive officer of Hiscox, says the expectations of employees shaped his organisation’s decision to join RSA in moving into 22 Bishopsgate just over a year ago. 

Hussain, whose offices are adorned with art by the likes of Francis Bacon and offers panoramic views of London that rival those provided to tourist attractions like The London Eye, says: “It's [the move and layout] had a very positive impact on team morale – there’s a real buzz in the office which is great to see.

“Recently we’ve seen a significant increase in the number of people choosing to return to the office; they enjoy the face-to-face interaction with colleagues and customers, and there are some activities that people find easier and more constructive to do together. 

“Many of our people are now in the office three or four days a week.” 

Post-pandemic, Myles Ruffy, group real estate director at Charles Taylor, says it is important to recognise insurers want a lot more from their workspace than just a desk and a laptop that allows them to work anywhere.

Ruffy says: “Many of our employees commute to work. It is therefore essential to offer them an atmosphere and comfort which is superior to what they have at home.”

Bigger is better

As well as relocating to taller buildings, many companies that Post have also defied predictions of shrinking general insurers premises post-pandemic by increasing the size of their HQ.

In 2021, claims services provider McLarens opted to move from Ibex House, in Minories, where the business had resided since the 1980s.

McLarens chose Forum House, which can be found at 15 to 18 Lime Street, as part of a move to bring together City operations with those of McLarens-owned specialty adjusting firm Lloyd Warwick International. 

In 2023, McLarens further extended the space it occupies in its new HQ by more than 50%, taking a lease on an additional floor in Forum House and refurbishing it to add additional meeting rooms and collaborative areas. 

According to bosses the 8,500 square foot space and prime City of London location, a stone’s throw from The Lloyd’s Building, allows the business to serve global specialty markets including aviation, construction and engineering, crisis management, marine, natural resources, and specie.

Like McLarens, McGill and Partners is also moving from 100 Leadenhall Street to bigger premises in 40 Leadenhall.

Stephen Cross, McGill’s group chief operating officer and head of innovation and strategy, says the expansion was driven by business growth, as well as the need to accommodate both the existing team and future talent.

He says: “We always want to ensure that every colleague has a space to work in the office – whether they choose to use it on any given day or not – and the decision to move will ensure we have sufficient space for future talent and to support our long-term expansion plans.

“Our focus when choosing a new location was to find a space that not only met the practical needs of our colleagues but that would be a place they want to come and work in. 

“We have come a long way from grey office blocks that people can’t wait to clock off from.”

Cross says 40 Leadenhall appealed partly because it has ample facilities such as bike storage and showers, as well as being in the heart of the City’s “thriving social environment.”

The proximity to other players in the market was a key factor for many in staying put in the City in the years ahead and saw some pair up to negotiate more property bang for their combined buck.

Cross says: “Such a location [as 40 Leadenhall] will allow us to establish connections within the broader business ecosystem, facilitating collaboration and synergies with key stakeholders in the vicinity. 

“We’re also transitioning to the new space with Chubb, with whom we currently occupy 100 Leadenhall Street, and our collaboration underscores a shared commitment to embracing progressive workplace strategies.”

Break clause

Talking to insurers about their future property plans makes it clear we are unlikely to return to doing what Commercial Union did in building St Helen’s and staying put for more than half a century anytime soon.

Events since the turn of the century shows the pace of operational change in insurance is relentless and Paul White, regional CEO of international at Sedgwick, says when making decisions about leasing property today it is important to appreciate “the situation is still fluid”. 

White, who recently reduced the amount of space Sedgwick occupies in 30 Fenchurch Street from three floors to one, says key players in the sector are keenly aware that while some people working in the industry have fully embraced working remotely, others have been keen to encourage employees back into the office.

He observes wise insurers in the modern world monitor the organisational impact of any changes in the way the industry operates and can adapt their property footprint “as needed”. 

Today, rather than boasting of the great long-term rental rate they have secured, most insurers stress they have break clauses in the lease of the building to ensure they can review their office requirements on a regular basis.

Insurance chiefs want to be able to reduce or expand the square footage they occupy in the Square Mile depending on the requirements of the business at that point in time and if, like Aviva’s St Helen’s building, views on some floors are blocked by newer, bolder skyscrapers. 

Charles Taylor’s Ruffy reflects the views of many when he says: “We will continue to monitor constantly evolving working practices and how our spaces are being used and will adapt to that pace of change. In my job, we never stand still.”

Horizon scanning

What is certain – for now at least – is general insurers are making the most of the new landmark structures appearing on the London skyline and the City's status as the world’s dominant insurance centre, underpinned by the allure of Lloyd's, remains. 

For insurers to thrive, today’s CEOs universally recognise collaborative space, with great art on the walls, facilities akin to a hotel’s, areas for quiet reflection and skyscraper a stone’s throw from Lloyd’s using greener energy, with Instagram-able views plus a steady supply of coffee, is what is required.

Because while the City’s skyline may constantly be changing, the caffeine cravings of insurers have stayed steady for centuries.