London Market must attract young talent to remain competitive

The London Market lacks the young talent it requires to help it adapt to some of the technology-driven change it is pushing through including the introduction of its electronic placement platform.

Placing Platform Limited (PPL), which allows brokers and underwriters to exchange information electronically, went live in July. PPL is part of a wider set of initiatives to modernise the London Market named “The London Market Target Operating Model (TOM).

But pick-up rate has been disappointing – something some attribute to a lack of the right talent.

The first class of business to test the platform was stand-alone terrorism and first risk bound. Next will be financial and professional lines by the end of the year, followed by marine, said Lloyd’s chief executive officer Inga Beale, at the launch of a “Manifesto for growth and modernisation of the London Market” in London.

Beale stressed the need to embrace technological change at Lloyd’s in order to remain competitive.

“We might be feeling perhaps a little complacent that we are on the specialist arena here and we are somewhat protected, but things will be coming at us from all directions,” she said.

To make her point clear, Beale said that data volume is estimated to be doubling every 18 months and “data is increasingly being used to improve risk assessment and to enable people to use pricing based on usage.
“Companies that can use this data and use it properly to really develop their businesses are those that will prosper.”

To be able to remain the centre for global specialist insurance and reinsurance, the London Market needs to put efficient systems and processes in place. Otherwise “we will be vulnerable to the attractiveness of some dynamic, tech-savvy new market entrant,” she noted.

The introduction of PPL has triggered fears at some underwriters that it could replace face-to-face negotiations at the traditional London Market. Opposition from practitioners could endanger the project as the technological platform can only deliver efficiencies if market participants make use of it.

Lloyd’s is currently undertaking some analysis on the take up rate of PPL, but Beale suggested that it is not as high as it could be. Underwriters are blaming brokers for it and brokers blaming underwriters, she said. But any inertia of market participants will have consequences for all the market, Beale said.

Inertia is more likely to come from older practitioners, and therefore hope relies on the younger generation.

When doing the engagement for the TOM, the LMG (London Market Group) focused on the “under 35s” because it is really about designing it for them, Beale said. “They are going to be the next generation,” Beale said.

Nicolas Aubert, chairman of the LMG, added: “We are developing some tools and the youngest part of our generation within our company are a fantastic fit for these opportunities.”

CEOs of companies within the London Market need to empower the younger employees and make sure that they can use the new technology, Aubert said.

Beale pointed to the fact that after joining the London Market, younger employees tend to leave their more modern world outside of the office as they are exposed to behaviour that doesn’t necessarily embrace new technology and they seek rewards from their superiors. “We have to engage with them and give them a feeling that they can actually have input and influence,” Beale said. “The most senior people have to enable them and allow them to have a voice on the table,” she stressed.

Attracting young talent may be an issue for the London Market. An increasing number of companies are interested in learning how to make their businesses more attractive to the younger generation who might be choosing to go to a tech company instead, Beale noted.

Aubert believes that the London Market will succeed in attracting younger talent as it markets the Lloyd’s story and connects it with market modernisation and technological improvements. “But we need to reengineer our processes, reengineer the way we look at our business so that we can attract new talents and new skills that the London Market will need for the future,” he said