Lloyd’s Neal: Now is a “great time to be in insurance” amid global specialty opportunity
Lloyd’s CEO John Neal has called on (re)insurers to harness the growth potential of the commercial, corporate and specialty segment to strengthen the sector’s relevance in the face of rising global instability and volatility.
In a keynote address at a PwC briefing in Monte Carlo, Neal urged the London market to take the opportunity to grow in specialty classes.
“I think the biggest risk is actually a positive opportunity, rather than a negative one. There is such a value proposition for insurance at the moment, we’re going to see commercial, corporate and specialty insurance and reinsurance growing from about £1.5trn to £2.5trn,” he said.
“I get in trouble for talking about what the market could be able to do. But I think the opportunities for Lloyd’s – and for London, in a way – in that specialty end of the market are huge. The risk is that we miss that, and that will be a shame. There is a real opportunity for us to be more significant than we are today.”
Neal also called on brokers, carriers and reinsurers to broaden conversations at the Rendez-Vous to explore more solution-oriented thinking and underline the value proposition of (re)insurance rather than getting stuck on price.
“When we come here, the usual debate ensues. It’s the debate that has to – the capital talks about its pricing adequacy to maintain that position, and the broker feels a responsibility for the customer to talk the price down,” he said.
“We definitely need to have those conversations, but in the middle of it there is a customer base out there that is really looking at us. There is a real chance for us to be solution-oriented in listening to what that customer is saying. For once, the CEO and the CFO want to talk to us and hear how we can help.”
Global instability
Amid the current era of global instability – driven by the “domino effects” of geopolitical conflict, macroeconomic trends, rapid technological development and the impacts of climate change – Neal highlighted the role that insurers can play in fostering stability and confidence.
“Despite all the Monte rush, I don't think there could be a better time to convene, because we’re in one of those moments of global instability,” he continued.
“Uncertainty is the order of the day for us at the moment, and I have a feeling that that is fair set for the foreseeable future, especially as we all hold our breath and look gently westwards to the election coming up. So whilst it might be a tough time to be in politics, I actually think it’s a great time to be in insurance – and I certainly haven’t said that on many occasions.”
Neal noted that 60 of Lloyd’s 200 territories are holding elections this year, representing 49 percent of the global population.
“National elections have spoken pretty decisively, and the overwhelming message has been a call for change. Incumbents have been balloted out, with voters opting for a new status quo,” he said.
“We’re no doubt looking at much more rapid turnovers in governments and movements morphing before anything can mature. That’s where insurance can step up to the plate, providing our customers with a bit of continuity and giving them confidence beyond the limits of an election cycle.”
Other macro risk trends outlined by Neal include the Baltimore bridge loss in March – although the industry has covered marine losses for centuries, this was unique in having a contemporary impact on global supply chains and business interruption.
Elsewhere, the CrowdStrike outage in July was described as akin to a hurricane with no available categorisation, landfall location, or escalation predictions.
“We can easily see these types of losses aggregating exponentially. We’ve got to work really quite hard to understand the stability of the cloud and risk that presents, and probably take lessons from CrowdStrike into the exposures that we’re writing today. It’s a bit of a warning and something for us to think a bit more carefully about.”
Neal concluded: “For the first time in a long time, our voice matters with the C-suite community. We need to be ready to answer the call. The good news is, I think we’ve never been in a better position to take up the mantle. The market feels more disciplined, it feels more ready and more able to grow than it has for a long time.”