Plenty more to offer

Chris Mackinnon sees Lloyd’s as well placed to meet the challenges of a volatile environment, as he moves into a regional leadership role

By Wendy Pugh

After leading the Lloyd’s business in Australia for nine years, Chris Mackinnon is taking up a regional role encompassing an area with 80% of the world’s population and 70% of United Nations-recognised countries.

Mr Mackinnon says as Regional Director for the Asia-Pacific, Middle East and Africa, he will be working with a team of experienced country managers, many of whom he has come to know well during his time with Lloyd’s.

“My job is to get the best performance that we can to the benefit of everybody, but I’m not the main actor,” he tells Insurance News. “I’m going to be making sure the country managers and the market development, market engagement people across the region have the opportunity to really drive and grow the opportunity in our particular territories.”

Mr Mackinnon took up the role on April 1 after previously adding regional deputy director to his Australia and New Zealand responsibilities. The retiring regional director, Tokyo-based Iain Ferguson, will remain as Japan President until the end of this year.

Chris Mackinnon says the market faces a pivotal period

The regional changes come as Lloyd’s globally has emerged from a difficult period and turned around its performance. Last year’s result was described by Chief Executive John Neal as the market’s “best in recent history”.

Lloyd’s delivered an underwriting profit of £5.9 billion, a £3.3 billion increase on the previous year. Gross written premium rose 11.6% to £52.1 billion, with volume growth of 4% and price increases of 7% offsetting inflationary trends.

The market has seen 24 consecutive quarters of price improvement.

S&P in December raised its financial strength rating for Lloyd’s to AA- from A+, while AM Best has boosted its outlook to positive from stable.

Mr Mackinnon says the strong financial result was built on “five to seven years of hard graft”, tough decisions and some difficult conversations, and a focus on delivering on business plans and expectations.

“The word that keeps getting repeated … within Lloyd’s and through our market messages is discipline,” he says. “We’ve got to where we are, we’ve driven performance to where we want it to be, now we need to maintain discipline because we need long-term sustainable results that deliver, and not just have one good year.”

The market has called out issues in directors’ and officers’ cover and Mr Mackinnon says cyber requires careful attention in terms of policy structures and wordings, and understanding of risk exposures, but there are no classes causing problems on a systemic basis.

Some recent discussion on premium outlooks has speculated about impacts from a turn in the market cycle, but Mr Mackinnon doesn’t expect a tipping point and sharp slide, in a repeat of the past, given insurers can’t afford to be complacent about long-term viability and challenges.

“We’re quite excited about the opportunity to continue to grow and build in Australia.”

“I don’t think you’ll find too many insurers who are comfortable about the idea of driving prices down over the next couple of years,” he says. “There will be pockets of cover that will come off a little bit, and that’s just a normal market correction, but we’re not seeing at the moment any real indication of increased volatility around price stability.”

Lloyd’s is continuing to work on a high-profile transformation blueprint to harness technology that will improve efficiencies, support innovation and simplification, and help make the market more competitive and a more attractive place to do business.

British insurer Aviva last month said it was re-entering the market with the acquisition of Probitas Managing Agency, and Mr Mackinnon says Lloyd’s has identified globally important insurance businesses that are not part of the market, or have little business there, where there may be opportunities for greater engagement, such as through alternative capital structures.

“We’re looking to attract new entrants into the market, new investors into the market, so conversations with large insurance businesses around the world are ongoing,” he says.

The marketplace – which has its origins in a London coffee shop in the 1680s – is almost part of Mr Mackinnon’s DNA. He became Lloyd’s general representative for Australia in February 2015 after 27 years in the international insurance broking industry in London and Sydney, but his connection extends back much further.

“My great-great-great-grandfather was underwriting in Lloyds in the 1870s, and every generation of my family since then has been in Lloyd’s,” he says. “I chose to be in insurance, it was a very deliberate career decision for me because I was fascinated by it.”

Mr Mackinnon worked initially at Lloyd’s as a marine broker, came to Australia with Marsh and has held senior roles with Gallagher and Aon. He was CEO at Gow-Gates before being drawn back to the Lloyd’s market, and has a sense of vocation there.

While he was leading the local operation, Lloyd’s grew its Australia business from about $2 billion of premium written in 2015 to about $4.7 billion last year. The number of coverholders has increased from 90 to more than 160.

Who's taking the reins in Australia?

Lloyd’s has broadened the responsibilities of two executives in its reshaped local leadership team.

Tracey Bryan has navigated a shifting regulatory and market landscape since joining Lloyd’s more than a decade ago, while also being across diverse operating environments in a range of countries.

She has become General Representative in Australia and Vanuatu and continues as Head of Regulatory Affairs and Compliance Asia-Pacific, where Lloyd’s operates under various arrangements in markets including Singapore, Hong Kong, China and India.

Ms Bryan has also been appointed a non-executive director of the Insurance Council of Australia, taking a position held by Chris Mackinnon, and was a member of the past two industry code review committees.

The code is now being reviewed again, while more regulatory change may flow from the parliamentary inquiry into insurers’ responses to the 2022 floods and work to improve the clarity of the Corporations Act and related rules and regulations.

Ms Bryan says innovation should be kept in focus in the regulatory context.
“I think it’s important that we keep an open dialogue with regulators because we’re dealing with lots of legislation that’s been in place for a number of years and may not contemplate some of the products that are being developed now,” she says.

Tracey Bryan

Peter Plustwik

The Lloyd’s leadership team changes also include the promotion of Peter Plustwik to General Manager.

Mr Plustwik, who has held leadership positions at IAG and Allianz, joined Lloyd’s in 2020 as dispute resolution team manager. His new role adds areas such as marketing and engagement, customer standards and back-office functions.

His dispute responsibilities link into work with coverholders and managing agents around products offered, policy wordings and enhancing market outcomes, he says.

“Particularly from a Lloyd’s brand perspective, it’s extremely important that we have visibility of what customers are actually experiencing when they hold policies underwritten at Lloyd’s,” he says.

The market has worked with the Australian and New Zealand Institute of Insurance and Finance to introduce a four-module short course on Lloyd’s and supports a scholarship raising qualifications from certificate to diploma level.

Mr Plustwik says it is part of an improvement focus for Lloyd’s locally.

“Anything that I do, be it in marketing, events, be it customer standards or market engagement, will have that continuous improvement focus – how can we be the very best at what we do?”

Australia is Lloyd’s fourth largest market globally, but Mr Mackinnon says it has only about a 7.5% share of the country’s general insurance market and there is no shortage of growth avenues, including in areas such as parametric cover and other innovative products.

“I think we’ve got plenty more to offer. We’re quite excited about the opportunity to continue to grow and build in Australia, and not just in traditional forms, but also looking at non-traditional.”

Australia, New Zealand and the Pacific still fall within Mr Mackinnon’s mandate in the regional role, but he has relinquished direct country responsibilities in moving to Singapore.

In Sydney, Lloyd’s Head of Regulatory Affairs and Compliance Asia-Pacific Tracey Bryan has this month additionally picked up the role of General Representative in Australia and Vanuatu, while Peter Plustwik, who joined in 2020 as dispute resolution team manager, has been promoted to General Manager.

Mr Mackinnon says the global supply of risk capital is insufficient to meet demand, and countries including Australia and New Zealand are competing for that supply. As a result, improving mitigation and resilience is critical.

“We are inherently risky countries – we have earthquakes, bushfires, floods, hailstorms and everything else – so we need to work very closely with government in partnership to demonstrate to the global risk capital providers that their return on investment and the partnership is attractive,” he says.

“As a broker, if you’ve got a client with a factory, the broker’s job is to convince an insurer that it is worth allocating risk capital to that risk; as a country, we need to do the same thing.”

The world is in a period of increased volatility. There is a war in mainland Europe, the Middle East conflict, Red Sea shipping dangers and risks around climate change. Forty major elections are taking place this year.

Mr Mackinnon says it’s a pivotal period and Lloyd’s has never been more relevant. He says the market is in a strong position, at a time when the importance of insurance is heightened.

“Ten years ago, insurance was really not a conversation … around the boardroom table that often – it was the procurement officer or the chief financial officers’ conversation,” he says. “Now it’s a full board discussion at all times.”