As Lloyd’s regional director and president in the Americas, Hank Watkins serves as the highest point of contact in the U.S. for the world’s largest specialty insurance market. For years he’s also been one of the most widely recognizable faces on the board of the Insurance Industry Charitable Foundation (IICF), which harnesses insurers’ altruistic power to help bestow millions of dollars in grants as well as leadership and volunteer service each year to organizations serving those in need.
And just like you, he’s still working from home – trying not to wake his family while operating five hours behind London time. “Every day I’m in meetings early, at the time I’d be normally be commuting to New York and although I’m on a headset you’re still banging around,” he says.
Even as someone who’s used to balancing social responsibility with his professional endeavors, Watkins was floored by the impact that one recent IICF grant had on hundreds of New Jersey kids. Launched in the summer of 2020, the COVID-19 Children's Relief Fund helps support children at risk of food insecurity, educational disruption, family homelessness and other circumstances exacerbated by the pandemic. Shortly after IICF established the fund a year ago, brokers and insurers responded with $1.3 million in donations that have since provided meals to 2.5 million families.
The IICF’s various divisions throughout the U.S. award funds to local charitable organizations: in the case of the Children's Relief Fund, its Northeast division made a $75,000 grant to a group called Fulfill, a food bank based in Neptune City, N.J. For the weekends, Fulfill provides backpacks full of food for kids who would otherwise go unfed when they’re not eating meals served through public school educational programs.
“In normal times, they have trouble getting food on the weekends,” Watkins notes. “So, when all the kids got sent home during the pandemic, demand for Fulfill's services went through the roof. I was part of that grant presentation to them, and it was just heartwarming. I was there with Betsy Myatt, Executive Director of the IICF’s Northeast Division, and the executive director of Fulfill and one of her colleagues – and her colleague got choked up while explaining that because of that grant, they were going to be able to feed 500 children from underserved communities on the New Jersey shore over the July 4th holiday.”
While pockets of poverty and need certainly exist everywhere, Jersey Shore communities are not among those typically associated with children who struggle to get three squares. “Who would have thought?” he says, incredulously. “But we have examples like that all over.” As such, he adds, the IICF’s Children's Relief Fund for 2021 has been launched and can be accessed at www.IICF.org.
The great pivot
Due to the continuing effects of the pandemic, the IICF has had to pivot for more than a year now on all its in-person fundraisers, transforming one event after another into virtual affairs.
Yet the results were no less impressive for the fundraisers being held online: the IICF’s Northeast Division gala, normally held in New York City in December, raised $901k; its Southeast Division event in February brought in $606k, while its March fundraisers hosted by its Midwest, Western and UK Divisions brought in $403k and $150k, and $70k respectively.
“I think that people working in an industry that promotes resiliency are naturally compelled to step up at times like this,” says Watkins.
Recently, Watkins was appointed chair of the IICF International board of governors, a new role in which his mission is to better understand the needs of all its members as well as the IICF’s grantees and provide a vision for the organization going forward. “It enables me to have a better understanding of how IICF operates internationally, because we have four U.S. divisions and one in the UK,” he says. “I want to be further connected with all the divisions and learn what IICF CEO Bill Ross, his team and I can do to grow the impact of IICF and our industry.”
Those efforts, facilitated by the ease of participation in virtual events, include more face time during the IICF’s virtual fundraisers and the upcoming IICF Inclusion in Insurance Forum, set for June 15-17.
The human impact of all these efforts on society and thousands of insurance industry participants is what keeps Watkins motivated: “When we present checks to each of the executive directors who represent the organizations that are benefiting, they're just blown away,” he says. “It's amazing what a check for anywhere from $3,000 to $50,000 will do for an organization that otherwise wouldn't have money to invest in the mission of the charitable cause they’re championing.
“It’s extremely grounding being involved in this because as you step out of the ‘office,’ get out of your day-to-day activities and realize that so many people out there are benefiting from what we do – yet there's such a great demand for it that all we can do is keep going, to keep meeting it,” he adds.
The ‘Future’ unleashed
Watkins is enthusiastic about progress being made around modernization efforts in the Lloyd’s market, many of which are riding a wave of momentum set into motion by the all-virtual, all-the-time effects of the pandemic that preceded the launch of Blueprint Two in November 2020. This second phase of the market’s evolution focuses on the acceleration of digitizing processes directly related to two core placement types: open market and delegated authority business, which together represent more than 80% of the value and 90% of insurance contracts placed at Lloyd’s.
One of the more recent developments is the Lloyd’s virtual underwriting room, through which brokers can present risks to multiple syndicates online rather than visiting the Underwriting Room in person. The timing is fortuitous, as Lloyd’s is scheduled to re-open on May 17 but only to a limited number of people initially in compliance with COVID-19 safety guidelines.
Especially as the pandemic progresses, Watkins says, paying claims is critical; he points out that the Lloyd's market will end up paying $7-$8 billion in gross losses by the time life returns to something resembling normalcy. “The extreme challenges presented by the pandemic tested the industry like never before, and will hopefully lead to more effective coordination of private and public resources in response to the next systemic risk,” he says.
In an effort to improve the market’s data reporting around catastrophes, Watkins points to Lloyd’s engagement with Optalitix, an InsurTech graduate of the Lloyd's Lab and an all-digital catastrophe-reporting portal that enables all stakeholders in a major event to more efficiently manage their financial responsibility to policyholders. “Within days of a major cat, whether it's wildfire, lightning, tornadoes, hurricanes, regulators want to know, what's your exposure?” he says, and those inquiries have been coming with increased frequency.
Lloyd's, he points out, “has long been challenged by the fact that up to 35 or 40 syndicates are involved at different layers of loss in a catastrophe. TPAs hired by syndicates are separately submitting information to syndicates so that Lloyd’s can report it to the regulators, which leads to a time-consuming and inefficient process which InsurTechs like Optalitix help to improve.”
The Optalitix solution digitizes that normally labor-intensive series of paper trails, streamlining them to a single database. “It's a really important step forward for us on the cat-response front.”
Overall, the aggregation and utilization of data “is something that we all talk about but we're really advancing that conversation too, so that if you're a coverholder, the days of submitting your exposure information via Excel spreadsheets are going to be memories of a bygone era,” adds Watkins.
Lloyd’s is working toward a future ecosystem where all that data is going to be available online, “immediately distributed to the Lloyd's syndicates, to the Corporation of Lloyd's, all the way through the process. Just data, no paper – and then when claims are submitted, ideally there's going to just be one touch on the claim and all the data needed to adjust that claim is not going to be in files or folders. It's going to be all online for everybody in the process to see.”
On successes in the “syndicate-in-a-box” front, Watkins cited Parsyl, another InsurTech Lloyd’s Lab graduate that has turned that success into the formation of Syndicate 1796, established to insure the storage and transportation of COVID-19 vaccines to emerging economies. The syndicate is the foundation of the Global Health Risk Facility (GHRF) at Lloyd’s, which provides insurance and risk mitigation to support the manufacturing and distribution of vaccine development efforts to combat the global pandemic.
“They’re not only insuring COVID-19 vaccine shipments to developing countries, they provide the suppliers of those vaccines with the sensors that accompany each shipment,” he notes. Parsyl ensures that journey from start to destination is completed, including delivery by cold storage – via tracking data that the InsurTech is uniquely positioned to monitor through its proprietary technology.
In addition to a spate of continually evolving digital processes, by 2022 all of Lloyd’s syndicates will have another thing in common: all will have been asked by Lloyd’s to forego providing new insurance coverage after Jan. 1 to thermal coal-fired power plants, thermal coal mines, oil sands or new Arctic energy exploration activities, according to the market’s late-2020 ESG report. In respect of renewals, Lloyd’s syndicates will be asked to non-renew existing policies covering these activities as of Jan. 1, 2030.
“Everybody's trying to figure out how they reduce their carbon impact – and for insurance companies, it's not only through your operations; it's also through the businesses you insure and invest in,” says Watkins. “To facilitate this, we're thinking of ways that we can support the transition for energy business to renewable energy, a segment of the global economy Lloyd’s has insured for many years.”
In the meantime, Watkins is optimistic about the chances of the insurance industry returning to its workplaces this year.
“I'm ready. I’m looking forward to getting back again with people, because the efficiency of virtual meetings offers a lot of advantages, but the subtle part of our business is that hallway conversation, that three minutes waiting in the conference room before the meeting starts, whatever it might be, that you just don't have anymore. I think we all agree by now that a virtual-only environment, while clearly of great benefit to our industry and its stakeholders over the past year, will soon become an option rather than a necessity.”
Watkins foresees a slow, mindful transition back to Lloyd’s workspaces. “I think the entire EC3 environment is going to be up and running in some form or fashion pretty quickly going into the summer,” he adds. “People who have a long commute into London or New York might end up just going in on Tuesday and Wednesday, staying over Tuesday night and working from home on the other days – who knows? But think about the first conference we all go to – that's going to be really interesting. We will see how that all plays out.”
