Lloyd’s Neal says market must ‘seize once in a generation chance to change’

Lloyd’s of London CEO John Neal said the market needs to seize a once in a generation opportunity to digitise and innovate or risk becoming irrelevant.

He admitted that the 330-year old marketplace has not always embraced speed or change willingly. “Our survival hasn’t yet been threatened in the way it has been in some other industries, such as retail, and when the platform isn’t burning, proactive change is just more difficult,” he said speaking at the Marsh & McLennan Companies Rising Professionals’ Global Forum 2019 this week.

“As a sector, our choice is to continue with business as usual and become irrelevant or change and realise an enormous opportunity in the world of risk.

“We have a once in a generation opportunity to lead the marketplace in delivering innovative services and solutions,” he added. “We can do that by leveraging and seizing the spirit of innovation that’s always been at the centre of the market and the trusted partnership and relationship between the customer, broker and insurer.”

But Neal told the audience: “We’re facing quite challenging headwinds. Our products simply aren’t keeping up with the changing landscape of risks and we’re not harnessing all of the new capital that’s knocking on the door.”

Acknowledging the punitively high cost of doing business at Lloyd’s, he said: “For every $100 the customer pays us, the best value they get back is $60. I can’t think of an industry outside of our own where that would be tolerated.”

The CEO warned employers in the insurance sector that in addition to these challenges they also face a fight to attract talent as technology careers and employers are viewed more favourably.

“We are not yet seen as the desirable industry for young bright minds to want to work in, and is it any surprise when there are so many challenges in and around our marketplace?”

Seeming to comment on the recent furore around sexism and outdated attitudes at Lloyd’s profiled in the media, he said: “We need to ensure that inappropriate attitudes are eradicated and give everyone the chance of a rewarding career.”

Such challenges are not insurmountable, he said, but change needs to happen fast and make the most of loyd’s unique characteristics.

“We need to reset the way in which insurance and reinsurance is transacted globally.

“Lloyd’s has always been a platform – a marketplace where brokers, underwriters and capital have come together to create and exchange value by exchanging risk, ultimately for the benefit of our customers. The building blocks are in place. Now we have the challenge of unlocking and evolving a 330-year-old platform.”

He outlined a vision of a digital ecosystem that is “altruistic by design” with an open architecture of interconnected platforms and services. Plans include a Lloyd’s risk exchange for less complex risks and a claims service powered by artificial intelligence.

“Our expectation is that all the components of change agenda will be operational in some capacity by 2020. We’ve got to build at speed with solutions that are adaptable and scalable.”

In an appeal to the wider insurance sector, he added: “We want a collaborative expert community that improves underwriting and provides consistently excellent products and services
“For capital, it means making it easier and less expensive to attach to risk. For brokers, it means the value proposition of being part of the Lloyd’s ecosystem creates accelerated growth opportunities and that ultimately creates true and unique value for customers.”