Lloyd’s is considered a positive example of how to trade through lockdown effectively, but is there anything you would have done differently?
Lloyd’s has demonstrated real resilience and strength during this challenging time and I’m proud of how well the market and the Corporation has performed throughout the pandemic. We converted to digital operations seamlessly; remaining open and trading efficiently, providing customers with risk transfer solutions and support services without interruption.
Although the pandemic has shown that remote working and communicating virtually has its benefits, we have certainly faced challenges too. Lloyd’s has always thrived on face-to-face interactions; this is particularly important when you consider the kinds of complex customer needs that require problem solving and collaboration to find the best solutions. It is clear that there will always be a need for a physical space that enables people to come together to connect face-to-face, but lockdown has also taught us the benefits that a virtual space can bring too. The challenge going forwards is bringing the two together, to enable all market participants to collaborate in a much more efficient way.
In what ways do you think Lloyd’s will be permanently changed by COVID-19?
The implications of the lockdown reinforced the importance of building a digital Lloyd’s ecosystem powered by data and technology. We reimagined the Underwriting Room as a modern marketplace where people can still gather to transact business face-to-face, but where they can also connect virtually. This momentum has created an amazing opportunity to accelerate the implementation of digital enhancements and technology, including the creation of our new virtual room, enabling brokers and underwriters to connect and collaborate online, alongside the physical trading environment. This is an exciting milestone for Lloyd’s and will allow the market to reach out in real time to its customers and partners all around the world.
The lockdown period also meant that colleagues across the Corporation had to embrace remote working for a really extended period of time. We’re taking plenty of learnings from the experience and we’re offering a much more flexible approach going forwards. This is particularly important as we look to progress on our priorities to change the culture of the Lloyd’s market – and a flexible working approach has to be a part of that.
What sort of response have you had to the Recover Re and Black Swan Re proposals concerning systemic risk solutions?
We’ve been engaging with all of our stakeholders, including governments around the world, on ways in which the insurance industry can fast-track global economic and societal recovery and resilience to systemic risk. This includes three open source frameworks; ReStart, Recover Re, Black Swan Re; as well as product innovation and simplification. We’ve received a really positive response and continue to engage with stakeholders on how we can work together to respond to the pandemic. We expect to enter discussions on pooling arrangements for future systemic events later this year.
Has the lockdown derailed the Blueprint schedule and increased execution risk?
We’ve continued to execute against our ambition to create the world’s most advanced insurance marketplace. The pandemic has demonstrated the importance of the Future at Lloyd’s and we have sharpened our focus to prioritise development in three key areas that will deliver the most value to the market and our customers, in 2020 and 2021: improving electronic placement, enhancing Delegated Authority services, and making improvements to claims processes. In parallel, we will progress the foundational data and technology capabilities we need to support our plans. We’ll be launching the second Blueprint update in November this year, which will consider the actual solutions that we will deliver for the market; making it easier, faster and better to do business at Lloyd’s.
You took over responsibility for performance management after Jon Hancock left: how has that worked out for you?
Having started my career underwriting, I’ve really enjoyed getting into the detail of our performance-led agenda; understanding the needs and expectations of market participants, whilst ensuring we are set up to lead and support the market into a period of sustainable, profitable growth. Our half-year result demonstrates the impact that the Corporation and market’s performance management actions are having, with vast improvements seen on underlying metrics. At a pivotal time in the market cycle, I will continue to oversee this area and maintain a firm focus on performance through the second half of 2020 and into 2021.
In a recent report, S&P said it expects more syndicates to close by year's end: do you see more restructuring ahead for Lloyd’s constituents?
We are focused on delivering a first-class underwriting result at Lloyd’s; that means getting the right price for the right risk in this competitive market. We have made excellent progress throughout the first half of 2020, despite the challenges brought by COVID-19. Performance will remain a key priority both now and in the future; that is why syndicate business plans must be logical, realistic and achievable. This year, we’ve also taken a more differentiated approach to plans, segmenting syndicates based on their historical performance. Around 50% of the Lloyd’s market is performing well and doing the things they say they will do – so we are recognising them for doing so. On the contrary, 50% of the market is not performing and these syndicates must prioritise profit over growth in their 2021 plans.
What message are you sending out to underwriters gearing up for the 1/1 renewals, particularly in the context of a hardening market?
2020 marked the fourth year of consecutive rate increases and we expect this to continue into 2021. With that in mind, we’re seeing some of the best pricing conditions we’ve seen for two decades, so this will naturally bring some opportunity to syndicates. Whilst we expect the market to grow moderately above risk adjusted rate next year, our aim is for sustainable, profitable growth. Syndicates will be supported to grow, where that growth is logical, realistic and achievable.
Do you have any concerns over Brexit and the possibility of a no-deal scenario?
We have taken decisive action to ensure we are able to continue operating regardless of the outcome of political negotiations. Through Lloyd’s Insurance Company, located in Brussels, the Lloyd’s market can continue to access the Single Market, and our partners in the EEA can continue to access Lloyd’s expertise and financial security. This provides certainty not just for the Lloyd’s market, but also for our partners across Europe. We are committed to maintaining our deeply positive trading relationships with our European partners when the UK leaves the European Union.
Setting up Lloyd’s Insurance Company is part of a robust, lasting commercial arrangement for Lloyd’s and provides us with new opportunities for future growth in Europe. All of our teams have been active in reassuring our partners of our commitments and how we can support them, particularly in these challenging times, and we continue to assess all outcomes of possible Brexit risks.
This feature was originally published in Reactions.
