Lloyd’s new Chairman, Bruce Carnegie-Brown, has called for a renewed emphasis on modernisation of the 300 year old insurer, saying that while Lloyd’s underwriting performance has been strong, the firm’s success is stunted by its overweight cost structure, in an interview with the Financial Times.
“I don’t think the industry is doing enough to innovate,” he told the FT, explaining the challenges of updating technologies and digitising insurance systems, the firm’s progress in which he called “lumpy” so far and in need of revolutionising to remain competitive:
“People arrive . . . with files of documents. Those documents have to be photocopied, and those photocopies have to be scanned and digitised. If it was in digital form right at the beginning we could reduce the costs for the brokers in bringing business to Lloyd’s, reduce the costs for the underwriters in capturing the data and improve the quality of analytics.”
“There isn’t anyone who runs a syndicate here who isn’t aware of the need to create digital solutions to challenges and there isn’t anyone in the millennial generation joining Lloyd’s who doesn’t get frustrated with the fact that they have better technology at home than they have at work.”
“Until we convert everything from analogue to digital, we’ve got unnecessary costs,” Carnegie-Brown told the Financial Times.
The Lloyd’s Chairman said previous failed attempts to innovate and introduce new digital platforms and tools have meant “progress is lumpy because self-confidence is not as high as it needs to be.”
“Lloyd’s has tried to modernise before and it hasn’t been terribly successful, so people are sceptical of this but it’s a mindset issue, not a technology issue.”
Carnegie-Brown said some consequences of the digital revolution itself had put a damper on progress, as data ownership has suddenly taken on a new value, with digitisation and the use of AI meaning far more industry and customer insights can be gleaned from data than in the past.
This has meant that “nobody cared [about data] when it was in analogue form because nobody read it but in digital form suddenly it has huge value and so there are people who try to create obstacles to free movement of that data.”
“I don’t think the industry is doing enough to innovate,” he said, “insurance has been writing property cover for hundreds of years.
“If you look at the largest companies by market cap now they are mostly characterised by intangible assets rather than tangible assets and we’ve got to make sure the industry is innovative enough to respond to those opportunities.”
Lloyd’s has reported progress in its underwriting in the first half of 2017, however, this is offset by lower profit and return on capital and if recent event loss estimates prove to be accurate, Lloyd’s profits will likely be wiped out for the remaining year, demonstrating the urgent need for the insurer to transform and streamline its business.