View this article online: https://www.insurancejournal.com/news/international/2014/04/21/326847.htm
Lloyd’s has published a more detailed strategy for 2014-2016, setting out how it will work towards achieving its goals, embodied in its “Vision 2025” Plan, which details “how the Corporation will support managing agents, brokers and capital providers in an evolving distribution and capital environment,” said a bulletin on the Lloyd’s website.
The strategy also outlines how the Corporation will maintain the flexibility and efficiency of the Lloyd’s platform through innovation, to ensure it remains attractive to insurers, brokers and policyholders.
“We all know that Lloyd’s has an extraordinary opportunity to grow in developing economies around the world: we developed Lloyd’s Vision 2025 in part to address this opportunity,” said Lloyd’s Chairman John Nelson. “This plan, which will require active participation from all parts of the Lloyd’s market, sets out how we will work towards achieving our 2025 goals over the next three years.”
Nelson first announced the ambitious plan shortly after he succeeded Lord Peter Levene as Lloyd’s Chairman in 2011. He’s been working on the details ever since, and gave a description of the areas where he sees growth opportunities for Lloyd’s in an interview at the Reinsurance Rendezvous in 2012.
Lloyd’s recent announcement points out: “Vision 2025 was always intended to be a dynamic strategy and, two years on from its launch, there are some changes in emphasis.”
Building Lloyd’s share of insurance as well as reinsurance business in growth economies is important, for example. So Lloyd’s will increase its local presence, and in some cases local establishment, across international markets. The aim is to make it as easy for brokers and coverholders to access Lloyd’s as they would local market carriers.
The new strategy covers market modernization, including technology and processes, but it also addresses the way the market does business, now and in the future. It encompasses attracting and retaining talent, behavior, distribution relationships and more.”
The plan, as detailed on the website, highlights Lloyd’s strengths – its access to the world’s global markets; its financial stability; the mutual support network created by Lloyd’s unique subscription market; the specialist nature of Lloyd’s business expertise, and, perhaps most importantly “The benefits of Lloyd’s are underpinned by Lloyd’s leading global brand and reputation.”
In her introductory remarks, Lloyd’s new CEO Inga Beale said: “It is clear to me that Vision 2025 can only be delivered in collaboration with the market; both managing agents and brokers. Much of the work lies with managing agents and while strategies will vary between individual agents, collectively there is a need for adaptation and the promotion of a mindset based around more actively seeking business. Brokers play a critical role here as the market’s distribution partners.
“Some areas of this plan are clearly the direct responsibility of the Corporation. In others, the Corporation has an influencing and facilitating role; making the case for change and supporting market initiatives. So, while the principal content areas of this strategic plan are largely unchanged from the previous edition, some areas have a change in emphasis (international growth) and some have a broader focus (capital).”
Some of the sectors she said Lloyd’s intends to focus on include: market oversight, international expansion, diversification of capital, market modernization, and, significantly, “attracting and retaining the best people,” which she said is “core to Lloyd’s future success. The market needs to work together to attract, retain and develop the best talent from the widest possible talent pool and to provide accelerated career paths for high achievers.”
Although the original Vision 2025 Plan remains essentially intact overall, Lloyd’s singled out three areas where there have been changes. These include: “Increasing focus on insurance, in addition to reinsurance. Lloyd’s will have a local presence, and in some cases local establishment, in international markets, where this is a commercial or regulatory requirement for business access. Brokers and coverholders will find it as easy to access Lloyd’s as they would local market carriers.”
In parallel with the new strategy, Lloyd’s announced that it is “launching its new Corporate Social Responsibility strategy for 2014-2016. Lloyd’s CSR program has been refocused to address the key issues and opportunities presented by Vision 2025, building on Lloyd’s current work on social, ethical and environmental issues.
Beale said: “By paying careful regard to our social, ethical and environmental responsibilities, the Lloyd’s market will continue to be recognized around the world for its integrity and welcomed in the countries where it seeks to do business.”
For its Managing General Agents (MGA’s) Lloyd’s stressed that they will “actively attract business to Lloyd’s through brokers. The number of large managing agents will increase but smaller managing agents should continue to flourish. Lloyd’s will be the market of choice for international insurers and reinsurers. Any broker-owned managing agents will be subject to the existing 20 percent related party business restriction.
In addition: “New entrants (particularly overseas trade capital providers with a franchise) will be encouraged. There will be no minimum size threshold for managing agents but the maximum size will remain at 15 percent of premium.”
For brokers, Lloyd’s reasserted that it would continue to “be a broker market and will build on its relationships with the larger brokers, as well as encouraging other specialist brokers. Coverholders and service companies will provide efficient access to local markets and brokers will find it as easy to access Lloyd’s as they would local carriers.
Lloyd’s also said its “distribution chain will be optimized through the efficient use of technology,” and that it would “have a local presence, in some cases local establishment, in international markets, where this is a commercial or regulatory requirement for business access.
The remainder of the bulletin deals with the current state of the global insurance market, including its continued growth outside of the UK, the economic situation, regulatory initiatives, for which Lloyd’s said it is fully prepared, new challenges for the re/insurance industry, such as cyber risks.”
In the 2012 interview Nelson likened some of the initiatives for Vision 2025 are drawn from his experience of the banking industry, which he knows well. “In the 1980s, it transformed itself,” he said. “It went from being a British banking industry to a truly global banking industry, with people and capital coming, the best people, from all around the world, which created the hub for capital intermediation worldwide.
Although the general re/insurance sector is a much smaller market, Nelson sees similar opportunities for expansion and change will not only benefit Lloyd’s, but also the global re/insurance market generally.