Making things happen
Where it happens: Lloyd’s has a reputation for innovation
A former investment banker and current Chair of the Marylebone Cricket Club, Bruce Carnegie-Brown was first appointed Lloyd’s Chairman in 2017, and last year was reappointed for a third term, running until 2025.
He’s set the corporation’s direction and overseen its progress against four strategic pillars: performance, digitalisation, culture and purpose.
Performance has been a clear focus for Mr Carnegie-Brown for the past four years or more, working with Chief Executive John Neal to turn things around after a brutal self-assessment of the market.
“I talk about it in terms of Lloyd’s being match fit, and I’m not sure the market was particularly match fit in 2015/16,” he tells Insurance News.
The “bottom decile” of each business was closely examined, and the market’s managing agents were questioned over whether they should be writing such business at Lloyd’s. The message has been simple – if you can’t turn it around, get out of it.
That examination resulted in some syndicates being asked to withdraw from certain business, “and we’ve probably constrained the growth of the market while doing that.
“The better-performing syndicates have actually enjoyed quite a lot of growth, but it’s been offset by cuts to the capacity of the under-performing syndicates.”
Mr Carnegie-Brown says Lloyd’s is “largely through” that remediation process, but it must not take its eye off the ball.
“In the first half of 2022 the top-line at Lloyd’s grew 17%. We think that is sustainable growth, and the best evidence of that is where the attritional loss ratio is. The attritional loss ratio has improved very significantly over the last year-and-a-half, two years.
Insurance shouldn’t be so shy: This ship sailing past Istanbul was the first to load grain in embattled Ukraine while covered by London insurers, for whom transiting a warzone is normally a no-no. Mr Carnegie-Brown says the exports were made possible after insurers agreed to cover grain and fertiliser shipments via a “secure corridor”. He says the deal, which also involved the agreement of governments including Turkey, Ukraine and Russia, “would not have happened” without insurers’ agreement. The war in Ukraine is projected by several reports issued in December to have so far cost the global insurance industry $21.4 billion.
“So that remediation work is making us match fit and I think is allowing us to be a bit more front-footed about winning business.”
Linked to performance is digitalisation – the ongoing challenge to drive cost out of the marketplace and increase efficiency through the use of technology. It’s an issue that has been haunting the paper-obsessed market for at least 20 years, but the results of the change exercise are becoming more obvious.
The next two years will see many changes implemented, alongside ongoing consultation.
“We’re trying to build a gateway, a digital gateway at the front end of Lloyd’s, and if you populate the right data into the gateway, then you get a straight-through process that will drive down cost and error.
“That ultimately should benefit customers in terms of lower prices and hopefully give capital a better return. What’s been going on over the past couple of years is quite foundational work.”
On the market’s culture – defined by one of Mr Carnegie-Brown’s predecessors as “pale, male and stale” – advances have been made. An annual survey has in previous years uncovered negative experiences for women working in the Lloyd’s market. Targets for female percentages of senior management positions have been raised to 35% by 2025, but Mr Carnegie-Brown cautions against thinking that when that’s achieved the job will be done.
“There’s a risk that we congratulate ourselves on that pace of movement but, frankly, if you’re a woman you’re sitting there going ‘35% isn’t 50% and I’ve been waiting quite a long time to have the same opportunity as men’.
“The challenge is always calibration. Can we go faster? And how do we make that happen?”
Ethnicity is also a focus. The market has long been criticised for its lack of gender and racial diversity, which runs counter to its ambitions to expand into developing economies. Now Lloyd’s is aiming for one in three marketplace recruits to be from an ethnic minority background.
“We’ve achieved that for the corporation’s own recruitment, but in the market it’s probably one in five at the moment. So we’ve got a way to go.”
The last pillar, purpose, may be the most important of all and the most difficult for Lloyd’s to achieve.
Mr Carnegie-Brown believes the insurance industry has a great story – but isn’t good enough at telling it.
“I think the value proposition of insurance is phenomenal. When you think about what insurance does to put people back on their feet, when disaster happens – and we do it at all levels of government, business, communities and individuals – that value proposition trumps almost anything else in financial services by way of purpose.
“The challenge is, I don’t think we tell our story very well, and sometimes we let ourselves down.
“Anything we can do to underpin the value proposition of what we do is really important. It’s important to our customers, but it’s also important to being able to attract bright people into our industry who then want to stay.
“Insurance somehow instinctively sounds a bit dull, but actually, risk is very exciting.
“So when you have the opportunity to tell stories, like opening the market for shipping of grain out of Ukraine, I think it’s a really powerful thing. Without insurance, this would not have happened.”