Lloyd’s chief lays out plans to rejuvenate market

John Neal, the new chief executive of Lloyd’s of London, has laid out plans to rejuvenate the insurance market, promising to cut costs, increase the use of technology and win more business.

In an interview with the Financial Times, Mr Neal rejected suggestions from some in the market that Lloyd’s should focus on niche, specialist areas and leave the bigger, more commoditised policies to other.

“That would be utterly pointless,” he said. “I think quite the reverse. We need to be a global marketplace . . . every major insurance and reinsurance group in the world and every trading partner should want to participate.”

Lloyd’s has had five years of falling profits, culminating in a £2bn loss in 2017 that was partly caused by natural disasters that led to big payouts.

Mr Neal, who took over from Inga Beale in October last year, said results for the past three years have been “not acceptable”, and argued that the market had been slow to react to changing conditions.

He said he had spent the first few months of his tenure dealing with poorly performing syndicates and making sure the market’s post-Brexit EU base in Brussels was ready to start operating at the start of this year. He has also been meeting Lloyd’s insurers, brokers and customers.

Mr Neal is due to unveil details of his plans in a prospectus in March.

“We know that we need to be the most technologically advanced and cost-effective platform on which people can operate,” he said.

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Costs have long been a bugbear for insurers who work at Lloyd’s, with many of the big groups complaining it is much cheaper to do business elsewhere.

Mr Neal, who used to run Australia-based insurer QBE, sympathises with their view. “The reality is you can’t have a client spending £100 on a policy and have £40 of that being absorbed in cost.”

“I think we’ve just got to make the day job easier for the underwriter and broker to make it more efficient….[Administration] has got to be simplified,” he added.

Mr Neal believes that simplification — such as getting rid of duplication — can cut a quarter off the cost of doing business at Lloyd’s, which would help to keep prices down for customers.

He also signalled a shift in the market’s international priorities. Over the past few years, Lloyd’s has focused on winning licences and opening offices in emerging markets such as Morocco, Mexico and Colombia, while some people who work in the market think it should have concentrated on the US.

Mr Neal said that the network of licences was still important, but that the days of office-building around the world were over. “If you’re in insurance or investment banking or banking, one dollar in two dollars of everything you do is still US derived, so it’s very important that you maintain your connection and your relevance with the US market.”

He added: “At the same time, in a post-Brexit world we’ve really got to be very focused on ensuring that our connections in Europe are strong.”

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Mr Neal is expected to make additions to his top team over the next few months, with successors to chief financial officer John Parry and chief operating officer Shirine Khoury-Haq due to be appointed.



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