Asia is pivotal; cycle is dead: Lloyd’s Neal, SIRC 2019October 30 2019 by Andrew Tjaardstra
Speaking at SIRC 2019 on October 30, John Neal, chief executive of Lloyd’s told the audience how he is planning to help turnaround the market and the role of Lloyd’s Asia.
Neal (pictured) said: “Asia Pacific is a pivotal part of Lloyd’s future growth strategy, and a region to which we are committed to for the long term – as we celebrate our twentieth year in Singapore this year.”
He continued: “The region represents a significant source of capital for Lloyd’s, amounting to 14.5% in trade capital in 2018; it is our fifth-largest market based on premium written in and via Singapore; and it is profitable: if you take out the 2011 Thai flood losses, which were exceptional, the average combined ratio since 2010 has been 94%.”
“There is room for growth, too. In 2018, Asia Pacific accounted for 11.5% of Lloyd’s total income; at the same time insurance penetration is low in the region.”
This potential, Neal argued, can only be reached by increasing the efficiency of its Asia Pacific operations to make it easier and more attractive to access and work with, and to help those on the platform take advantage of future growth. The Future at Lloyd’s changes therefore need to be integrated with Lloyd’s Asia.
Neal added that “increasing Lloyd’s offshore premium growth in Singapore and reducing the costs of doing business. Much of this would be driven through the complex risk platform, the risk exchange and syndicate in a box. In combination, we think the Future at Lloyd’s will make the Lloyd’s Asia platform more profitable and offer an enhanced customer experience.”
He was open about challenges facing the the P&C market.
He said: “Challenging results have been a feature of the P&C market for some time. We put up with this decline for so long because there was too much hope invested in the ability of the cycle to pull the market out of the tough times – for the glory days to return. But, despite the rate increases we have seen this year, this is not going to happen. The insurance cycle is dead.”
“In other words, a strategy of ‘wait until the good times return’ is not the right one for our sector – and not the right one for Lloyd’s. We realised we had to take decisive action to improve performance, not passively wait for conditions to get better. We knew we had to radically transform how we do things – starting with performance but also including everything else we do.”
Last year Lloyd’s removed £4 billion (US$5.14 billion) of underperforming business from the market, but the business plans also contained £7 billion (US$9 billion) of new and innovative business, including cyber, sharing economy and parametric covers.
Neal added: “What we must do is make sure we make meaningful change. This is our best opportunity to make improve how we do things in London and in all our markets around the world. So, we have to take it – and think innovatively about the best way forward.”
Culture and people is one of the foundations of building the Future at Lloyd’s. He said: “As part of the Future at Lloyd’s we are building an inclusive and innovative marketplace in which everyone can excel and add value.”
He continued: “We are also making sure we have the new skills in place to build, operate and maintain a digital marketplace – skills like data architecture, engineering, data science and design. Some of these we will develop in-house; others we will have to source from outside. But wherever we source them, our aim is attract the most talented people in the world.”
While the fine fine details are still being worked out, the plan over the next year is to work with market associations to agree an approach to creating a future market workforce that is closely aligned to needed future skills.
Another area that is a high priority The Lloyd’s risk exchange is an aim to provide quotes digitally and also to pay claims through artificial intelligence.
- December 2
The APAC president argues market conditions are unsustainable, but is optimistic.
- November 20
Market sentiment at SIRC 2019 shows collaboration and growth on the agenda.
- November 8
The reinsurer has ambitious plans for the next five years.
- November 6
The chief executive says the rating environment needs to improve.