Lloyd's will innovate and adapt through challenging times
Charles Darwin said ‘it is the ability to adapt that counts’ and, over the last 300 years or so, the Lloyd’s market has shown itself to be highly adept at adaptation. During that time many political and economic challenges have arisen. In facing them, the market used these crises to renew and refocus its energies to emerge wiser, more outward looking and stronger than before.
Brexit is unquestionably such a challenge, creating unwelcome uncertainties for business. But it is also an opportunity to consider just how valuable our market is to the global economy. Built on financial strength, underwriting skill and entrepreneurial drive, in uncertain times Lloyd’s delivers the necessary financial certainty to allow businesses worldwide to take calculated risks.
My optimism for the insurance market is based on the firm foundations it has in the long-established centre of excellence that is Lloyd’s. This unique market boasts an enviable array of talent including some of the world’s finest underwriters and brokers. It is also synonymous with global leaders across support services from legal to actuarial, modelling and accounting, not to mention the market’s ease of capital access through London’s role as the world’s financial services hub.
When we rightly talk about the importance of recruiting, training and retaining talent for the future, we should not forget the outstanding pool of talented people already working in this market. And while there is a long way still to go, that talent is increasingly diverse.
Lloyd’s not only creates an all-important concentration of talent, services and capital, but also delivers diverse and sophisticated thinking and ideas about the challenges that the economy faces – most recently Lloyd’s has led the field in the development of cyber insurance and reinsurance and continues to develop relevant solutions as the threat evolves.
For these reasons Lloyd’s is a premier market for large complex commercial risks. Its licences and brand are door openers and can make a real difference to start-up businesses, including those in less developed economies. The regulatory framework creates a constructive tension between Lloyd’s central authorities and market participants, backed up by the FCA and PRA, which ensures entrepreneurial ideas can flourish, safe in the knowledge that the required capital and regulation are in place to protect policyholders.
These factors, combined with the advantages of conducting business in a central time zone and the many attractions London offers, have over the years made transacting insurance in Lloyd’s a sought-after destination for the world’s largest and most complex risks.
Yes, there is competition from Bermuda, Zurich, Singapore and beyond. These markets offer various advantages that Lloyd’s cannot: market proximity, tax efficiencies, or even less intrusive regulatory regimes. However, what their rise and success demonstrate, is that the vast amount of business that comes to Lloyd’s comes not because of the inducements of a tax windfall or a shorter journey, but because of broking and underwriting excellence.
Yes, the market faces modernisation challenges but I believe its response will prove both effective and enterprising – and will continue to innovate and thrive despite difficult market conditions and the need to reduce costs.
Over time we may’ve come to take our market’s unique strengths for granted, or perhaps not paused to fully recognise what has been built over the centuries. Now is the time for us to remember what the market has to offer the global economy and use the critical moment of Brexit to reinvigorate our outlook and adapt to working in a new world that will come along once today’s uncertainties have passed.