Lloyd’s has not reacted quickly enough to changes in the risk landscape and must offer products and services that are more closely aligned with what customers want and need, according to Chief Executive of the marketplace John Neal.
Speaking at a lecture today in Lloyd’s Old Library building, Neal emphasised the new threats facing re/insurers, and placed the ongoing modernisation plan within that context.
“Company’s face new threats because their assets are now predominantly intangible, what is described as software and data as opposed to the old fashioned tangible assets being property and equipment,” said Neal.
“Intangible assets are vulnerable to new risks, such as cyber attack and reputation damage, which require fundamentally different insurance products.”
Lloyd’s recently unveiled its ‘Blueprint One’ strategy, which proposes to enhance its value proposition to customers by offering better insurance solutions, simplifying access to products and services, reducing the cost of doing business, and building an inclusive and innovative culture.
These goals are intended to be underpinned by a heightened focus on underwriting performance, data, technology, and modern syndication of risk.
Lloyd’s historically, Neal acknowledges, has a patchy track record for execution.
“That’s a fact, one that does make people doubt whether things can be different this time around. It’s my job to convince the market and ultimately make sure that we get the job done well.”
Neal also highlighted the cost of doing business as a key issue, labelling it as “amazingly high.”
“The cost of doing business in our industry is 30% to start with and actually here at Lloyds that number is near 40%, and acquisition costs are still stubbornly high, even for the most commoditised product.”
“If it’s going to be competitive, we’ve got to put the technology and process simplification in place that allows an insurer’s 15% cost base to be close to single digit.”
On Lloyd’s ‘Syndicate-in-a-Box strategy’, which is dedicated to the design, launch and incubation of innovative insurance products within the marketplace, Neal stated there have so far been over 40 expressions of interest and that within 12 months, he expects to see between eight to ten businesses set up.
“We’re seeing anything from emerging market MGAs that want to capitalise on their capability to get some support for their underwriting, we’ve seen extreme AI businesses that would see themselves operating literally virtually, right away across to solutions that would potentially create an opportunity where capacities otherwise constrained.”