In a speech on Nov. 17, given at a conference sponsored by insurance service provider Xchanging, Julian James, Lloyd’s Director of world-wide markets, stressed that the London market faced continuing challenges in order to maintain its “world class” status. “Today I want to make a simple argument,” said James: “If Lloyd’s is to remain truly world class we need to take decisive action and become the platform of choice.”
He went on to discuss the many changes Lloyd’s has made over the past few years “in management, governance and structure.” All of which are aimed at making Lloyd’s more competitive. James warned against inertia. “Lloyd’s is operating in a fiercely competitive market, in which capital and expertise is mobile. To win – not just to compete – in that market we need not just to capitalise on our strengths, we need to urgently sort out what we know are our weaknesses. Simply we need to make it easy to access and do business with Lloyd’s.”
He also stressed that although Lloyd’s has been successful in adopting new strategies and procedures in the past, it still faces daunting challenges that must be addressed for its future survival. “The omens are good,” James stated. “Lloyd’s has shown that it can adapt and renew itself. We have a clear sense of the future. A future underpinned by the four pillars of performance management, a competitive platform, high quality business processes and a strong brand.” He went on to outline the measures Lloyd’s is taking to achieve success.
James noted that Lloyd’s faces challenges from Bermuda’s insurance industry, among others, from the increased use of captive vehicles and other forms of ART’s, and must increasingly deal with ever more sophisticated capital providers who are quick to seek the highest returns on their investments. He listed four benchmarks that are often used as “definitions of world class: Financial performance, competitiveness, service and brand perception.”
Taking them in order James noted: “There is no question that things have changed radically at Lloyd’s since the roller coaster ride of, say, 10 years ago. The past three years have seen consecutive profits for the Lloyd’s market, two of which were records, and in October the market reported its first ever set of interim results, a profit of almost £1.4 billion [$2.4 billion].” But James also faced the hard realities of the second half of the year, notably Katrina, which will eliminate the profits with a £1.4 billion loss. He still expects Lloyd’s to post a profit for the full year.
In terms of competitiveness, James said Lloyd’s “benefits from, the extraordinary infrastructure which makes up the London market. Addressing the Insurance Institute in the Old Library at Lloyd’s a few weeks ago, Dane Douteuil [CEO of Brit Plc.] put it nicely, ‘Tradition, experience, wealth of talent does count for something!’ Let’s not forget that we have earned the title of world’s leading specialist insurance market by providing the expertise of some of world’s best underwriters and some of the most innovative products available – on a daily basis. It’s an offering that few can rival.”
In terms of service, James noted that has traditionally “been seen as something of a weak point in the London market. Now, however, Lloyd’s is leading the way for change and progress is being made on a range of fronts. Take the mandating of the LMP slip, a standard form for recording deals done in the London market, for the first time in over three centuries. Used properly, it helps ensure that important features of the contract are documented in a more uniform way and are clear from the start
And finally James concluded that Lloyd’s brand is perceived as the “best known brand in insurance.”
For the second part of his presentation James focused on exactly what Lloyd’s is doing to “build a stronger, world-class Lloyd’s.” He discussed “four pillars,” as follows:
— Performance management
— A competitive platform
— Reform of business processing
— Brand development
In his concluding remarks James said he hoped that he had demonstrated two things: “First, that Lloyd’s is at the very heart of the London insurance market, the kind of place for which many, not least I, have a great affection and respect, and the kind of place which is difficult to describe, yet everyone understands its important role.
“Second, we are determined not to let this position slip away. But in order to stay world class we cannot remain static. Being the platform of choice will require changes in behaviour, resourcing, structure and management, and an effort of will from everyone in the market.
“I want to leave you in no doubt that the stakes are high. This is a crucial period for Lloyd’s. While we are not facing an external threat of the scale or nature of the late 90s, our future as the jewel in the London financial crown is not guaranteed. We are lucky that the thinking has been done and that a clear and workable strategy has been developed, but there is a lot of work still to be done. All of us need to play our part in that if we are to remain truly world class.”
The full text of James speech is available on the Lloyd’s Website at: http://www.lloyds.com.
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