Speaking at the MMC Young Professionals Forum in his first speech as Lloyd’s new chairman, Bruce Carnegie-Brown said the re/insurance industry needed to ramp its efforts to change and innovate or risk falling prey to disruption by external players.
He drew on challenges of industry disruption from his previous role as a non-executive director of Banco Santander – where he said the board was as concerned about Google and Amazon threat as it was by competition from traditional players within the banking sector.
In a clear-cut message to young professionals, he said, “If you’re not part of the change, you’re not relevant to the future,” conveying that each industry professional should take personal responsibility for shaking up traditional processes, harnessing the power of technology and engaging with customers around the world.
“We cannot afford to dangle our toe in the water; we must immerse ourselves fully. The next wave is already gaining traction, and artificial intelligence and machine learning will change the world as much, if not more, as the agricultural, industrial and digital revolutions that came before it.”
The Lloyd’s chairman said failure to plug the innovation gap could lead to being overrun by newcomers to the London and Lloyd’s market, “how are we going to ensure we own the future of our industry? We must embrace this new technology, we have to put customers at the forefront of what we do and continue to innovate.”
The dual pressures of soft premium rates and frictional costs is eroding margin and causing budget constraints – making it increasingly challenging for the industry to undertake the vast scale of change required.
He explained that intellectual property, brand and reputation now account for 84% of the value of S&P 500 companies, with major brands such as Skype and Uber owning little in the way of physical infrastructure.
Lloyd’s underwriters have taken a lead within the global in cyber insurance and insurer of private rocket launches, he added that it is also supporting initiatives such as the Oasis Loss Modelling framework, to offer syndicates “access to new risk models at a lower cost”, and opening offices around the world in an effort to get closer to the customer.
Initial steps to implement Blockchain, the establishment of global data standards and growing use of Big Data, including utilising satellite imagery to handle claims in the aftermath of last year’s Fort McMurray wildfires in Canada, are other areas in which the market is investing.
“We underwrite human progress and we step in when others can’t or won’t. We owe it as much to society as we do to ourselves to ensure the industry continues to do what it does best,” he concluded.