Lloyd’s announcement on Friday of the launch of its “Vision 25” program, an ambitious plan to prepare the historic London market for the future, came as no surprise to Hank Watkins, CEO of Lloyd’s North America. “We are planning for the next 10 to 12 years,” he told Insurance Journal. “Our long term goal is to avoid the [kinds of] problems Lloyd’s has encountered in the past.”
The plan, undertaken by Lloyd’s Chairman John Nelson in the months before he succeeded Lord Peter Levene in the position, aims to make Lloyd’s, and in consequence the City of London, the “global hub” for specialty lines and reinsurance.
Watkins explained that 85 percent of Lloyd’s capital comes from corporations, and increasingly from outside of the UK. “Companies from the U.S., Bermuda and the UK have all formed syndicates recently,” he said. There are currently 88. Vision 25 not only aims to keep that momentum going, but also to bring in companies and capital from other regions across the globe.
“You’ve got China Re, the biggest reinsurer in China,” Watkins said. “They are already working with Catlin, using Chinese underwriters, and we’d like to expand that.” Eventually companies, such as China Re, would be prime candidates to form new Lloyd’s syndicates. “We’re looking at China, Brazil and other emerging markets; there’s a lot of energy there both in underwriting and the people involved.”
Lloyd’s has probably picked a propitious moment for its international expansion. New rules, notably Solvency II and more standardized global accounting regulations, will require greater transparency and controls on capital. Watkins acknowledged that the establishment of the Franchise Board – now the Board of Performance Management, headed by Tom Bolt – was a major step in achieving greater control over the syndicates’ business activities.
If any proof was needed about its effectiveness, it appeared last year, as Lloyd’s syndicates collectively paid out some $20 billion in claims, but the overall loss was “only” around $800 million.
This type of control will be more frequently implemented in future years. Companies that come under the Lloyd’s aegis will therefore already have the types of fiscal controls regulators will require.
Timing may also be an advantage, as “we expect a market turn,” Watkins said, “and we expect to see a lot more [demand] out of surplus lines.” He also stressed the need for the increased use of technology, which Lloyd’s has already been implementing with its electronic claims file (ECF) program and the increased use technology to process endorsements, which will become even more important, as Lloyd’s expands internationally. Everyone who does business there will need to speak the same language.
“We’re also looking at ways to use social networks,” Watkins said. He wasn’t just talking about being on Facebook. Watkins, along with a number of other industry leaders, is concerned that the present “20-something” generation that has grown up using the Internet, mobile phones and a host of other electronic gear, are the people the industry needs now and in future years. Lloyd’s believes it’s critical for future growth that their skills be implemented into the framework of the insurance industry, he said.
Was this article valuable?
Here are more articles you may enjoy.