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As John Neal starts his first day as new Lloyd’s CEO, the broking community warmly welcomes him in his role and wishes him luck in driving the Corporation’s strategy over the coming years. Clearly, we may have a few ideas of our own as to what direction that strategy might take. So, ahem, if we may be so bold…
Each summer we run a series of lunches with our members to hear the issues that concern them. The future of Lloyd’s has been the number one topic of discussion, reflecting a variety of things:
Five years ago, if you had asked “What is Lloyd’s for?” most people would have pointed to three things: capital advantages, brand and the licence network. But today, capital is hardly scarce; the Lloyd’s brand is not widely recognised in those parts of the world where demand for insurance is set to grow and, while some big players do still use the licence network to dip a toe in the water in certain markets, it would not be impossible to replicate if needed.
So, what will define the next period in Lloyd’s glorious history? This is not just a question for the CEO of Lloyd’s. As a market we work best together. It is when the cluster comes as one and delivers results that outstrip its individual ingredients that the London magic happens. We all want well-defined, well-priced risk. We want innovative, flexible products that our clients want to buy. And we want a distribution system that is as efficient as possible to deliver these outstanding services to clients. Any one of our communities acting alone will never deliver this. Together all our best work – from R&R, through contract certainty and ECF to the Single Claims Agreement Party and PPL – is a result of that reality.
And what might that collective deliver? The first one is not new but remains vital. Lloyd’s has historically been where new products were invented. Statistical and anecdotal evidence abounds that this position has been eroded. So, we need to reverse that. We need Lloyd’s to resume its role as the global incubator for entrepreneurialism – about risk not technology. Bill Gates, Steve Jobs, even Elon Musk in his saner moments, are not deep technical experts. They are people who have an intrinsic understanding of what other people want. Then they find the right people to help them produce that and the technology to deliver. It is the insurance equivalents of these gurus that Lloyd’s needs to foster.
Today Lloyd’s has a tri-polar role. It is a sort of regulator; a sort of provider of market services; and a sort of promoter of the market as a whole. Nurturing innovation and entrepreneurialism will require a change. It will require an acceptance that businesses sometimes fail when they are trying to succeed in new areas. The role of Lloyd’s in the global insurance market of the future – whose major participants now essentially own Lime Street – is not to reliably make money. All those vast groups have other places they can do that. But Lloyd’s can distinguish itself by being the place they find most supportive for their experimental sides. The global sandbox (pit) for insurance innovation.
And what about that role as service provider? It is certainly true that Lloyd’s remains too complicated to trade with. The work we have done on PPL and the Target Operating Model has begun to address this but I think we need to do more and we need to be more radical in our ambition. Here is a challenge: in pretty much every other industry, the person selling the product sends the person buying it a bill. Not in ours. But if we could deliver the ability for insurers to invoice clients, the streamlining that would bring would reduce processing costs dramatically.
Deliver those two things and Lloyd’s genuinely will have something to trumpet – a unique, exciting offering distinct from the rest of the industry. And that will be worth promoting to those emerging economies that have yet to understand the true meaning of Lloyd’s. We as the distribution network would stand poised to lead that drive.
So, John, welcome. We want you to succeed. And we are here to help.
