The Lloyd’s market must evolve and evolve fast or risk driving itself into irrelevance. This was the warning from Lloyd’s chief executive John Neal as he addressed delegates at the 2019 MMC Rising Professionals’ Global Forum in London. .
“We’re facing quite challenging headwinds,” he said. “Our products simply aren’t keeping up with the changing landscape of risks and we’re not harnessing all of the new capital that’s knocking on the door.”
He said the cost of doing business at Lloyd’s remained punitively high. “For every $100 the customer pays us, the best value they get back is $60. I can’t think of an industry outside of our own where that would be tolerated.”
Most critically, he said, the insurance industry was facing a talent crisis amid the increasing dominance of the tech sector. “We are not yet seen as the desirable industry for young bright minds to want to work in, and is it any surprise when there are so many challenges in and around our marketplace?”
“We need to ensure that inappropriate attitudes are eradicated and give everyone the chance of a rewarding career,” he added.
The right building blocks
Drawing inspiration from Amazon, Mr Neal said the digital platform’s highly customer centric approach and ability to constantly reinvent itself were key ingredients behinds its growth from a start-up in a Seattle garage in 1994 to a $767 billion giant.
He thought Lloyd’s had a good base upon which to launch its digital transformation if it could leverage these attributes combined with its own unique characteristics.
But change needs to happen fast with some quick wins and off-the-shelf plug-and-play solutions an essential part of the strategy, said Mr Neal. “We need to reset the way in which insurance and reinsurance is transacted globally.”
“Lloyd’s has always been a platform – a marketplace where brokers, underwriters and capital have come together to create and exchange value by exchanging risk, ultimately for the benefit of our customers. The building blocks are in place. Now we have the challenge of unlocking and evolving a 330-year-old platform.”
Mr Neal’s vision is of an ecosystem that is “altruistic by design” with an open architecture of interconnected platforms and services. Solutions currently being developed include a Lloyd’s risk exchange for less complex risks and a next generation claims service powered by artificial intelligence.
“Our expectation is that all the components of change agenda will be operational in some capacity by 2020,” he said. “We’ve got to build at speed with solutions that are adaptable and scalable.”
“We want a collaborative expert community that improves underwriting and provides consistently excellent products and services,” he told delegates. “For capital, it means making it easier and less expensive to attach to risk. For brokers, it means the value proposition of being part of the Lloyd’s ecosystem creates accelerated growth opportunities and that ultimately creates true and unique value for customers.”
Neal acknowledged that speed and change had not always been easy bedfellows at Lloyd’s. “Our survival hasn’t yet been threatened in the way it has been in some other industries, such as retail, and when the platform isn’t burning, proactive change is just more difficult.”
“As a sector, our choice is to continue with business as usual and become irrelevant or change and realise an enormous opportunity in the world of risk,” he added.
“We have a once in a generation opportunity to lead the marketplace in delivering innovative services and solutions,” he added. “We can do that by leveraging and seizing the spirit of innovation that’s always been at the centre of the market and the trusted partnership and relationship between the customer, broker and insurer.”