Lloyd’s CEO Inga Beale said in an interview with Pia Tischhauser, a BCG senior partner and the firm’s insurance segment global leader, that as the new digital economy causes businesses in all sectors to re-examine and change business models, an evolving set of risks is emerging that constitute the next “massive opportunity”.
Beale said according to Lloyd’s research, this shift in standard business models has resulted in insurance currently being provided for less than 10% of the risks customers face and “that should mean huge opportunity. Massive opportunity.”
To fully realise this opportunity, the Lloyd’s CEO believes, the insurance industry should invest more into research and development (R&D), “I don’t think our insurance sector puts anything like enough time and money into R&D for insurance,” she said.
Of course, for many re/insurers, the question of how and where to invest has been the equivalent to being pushed and prodded while walking a tightrope.
The same forces driving the digital innovation: soft market conditions squeezing profitability, the market being saturated by excess capital, and an emerging set of competitors entering the global market, are in equal measures making this innovation more difficult.
Firms are having to cut back on spending while simultaneously being pressured by changing market demands to spend and invest more.
Lloyd’s is a case in point, recently having announced plans to slash up to 10% of its personnel and cut back on “unsustainable” admin costs.
But re/insurers have been pressing ahead with investments, and recent reports on InsurTech progress show they’re learning fast and making wins as a so-called “second wave” of more sophisticated start-ups emerge that are better suited to match re/insurers’ needs.
Looking to the future, Beale recognises that opportunities are in emerging markets as much as emerging risks, and shifting the workforce accordingly is an integral part of being prepared for the economic shift.
Specific steps to take, according to Beale, are ensuring the workforce leadership reflects both gender diversity and nationalities of emerging markets, incorporating; “a workforce that understands the culture and the nuances of doing business in those places.
“When we think about diversity we’re thinking about gender diversity, obviously, and we’re very pleased to report that at Lloyd’s we’ve actually increased the number of senior women and executive teams across the market.
“When we think about what the world is doing in terms of shifting from the West to the rest—in terms of economic power—and we look at where commercial insurance is going to be growing in the future, we know it’s going to be in some of those markets that Lloyd’s hasn’t traditionally been very strong in.
“But we also want to consider the nationality of people, their ethnic backgrounds, and how they will relate to the customers of the future. We have a big drive on that. We also have to react to what’s happening with technology, and we’ve got to appeal to some technically savvy people.”
