General Insurance Article - COVID19 to transform Lloyds into 21st Century marketplace

Aon has interviewed Lloyd’s CEO, John Neal, as part of its Virtual Reinsurance Renewal Season fireside chats.

 The goal of Aon’s fireside chats is to drive growth across the re/insurance industry in order to bring capital closer to clients’ needs and enable them to flourish in a stronger economy. The series will discuss the challenges and opportunities facing major re/insurers and insurance buyers, sharing both perspectives.

 Hosted by Dominic Christian, global chairman of Aon’s Reinsurance Solutions, Neal said that the novel coronavirus (COVID-19) pandemic had accelerated Lloyd’s plans to transform its iconic headquarters in the City of London into a workplace for the future.

 “The Lloyd’s building is almost 35 years old, so how can it be the right environment for the market to operate?” he said. “For the first time, we have both a virtual capability and a real capability operating simultaneously at Lloyd’s. We’ve also set some ideas on the table to metaphorically rip up the underwriting room and decide what it should look like in the 21st century, and what the marketplace should look like in the 21st century.”

 He added that the “transformation” Lloyd’s and the industry were going through was about reducing the cost of doing business with the ultimate objective of reducing the cost of the product.

 “I have been really clear when I have been on calls with the investment community, that [the cost reduction] is not a gift to margin; it’s got to be a gift to the cost of the product.”

 Addressing gender equality, Neal highlighted Lloyd’s as an example of how change could be achieved quickly.

 “The Corporation of Lloyd’s has gone to parity, and we’ve done that in two years, so when people say culture is a generational issue to change, rubbish – absolute rubbish. Yes, it takes time, but you can make a lot of change really quickly if you want to.”

 Neal said the insurance industry needed to do a better job of promoting the societal value of its product, adding that people who join the industry tend to do so with a sense of the “wellbeing we can create”.

 “The vast majority of the premiums we take in, ultimately those monies will be returned to the individuals, and businesses, and even the governments at their time of greatest need, and so right at the heart of insurance is the [notion of] societal wellbeing. There’s a value proposition and we have got to be so much better at translating that, as we have been the poor relation for such a long time in financial services. There’s a real opportunity for us to demonstrate to the next generation that there is a unique value proposition in insurance.”

 Neal added that better communication could also lead to clients regarding insurance as an asset rather than a cost, while stressing the importance for the industry to assist firms to acknowledge their intangible exposures and not just their physical ones.

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