Wednesday 15 Jan 2014 – We talk to Lloyd’s chairman John Nelson about the changing reinsurance landscape and his vision for Lloyd’s in 2014 and beyond. (source: Lloyd’s of London)
How was 2013 for you?
Thankfully there was a lack of major catastrophes in 2013. However, a continued softening of rates has meant that strong underwriting discipline is vital.
Part of the pressure on premiums is down to capital coming from new sources and this is changing the dynamics of how reinsurance is distributed. This will be a major challenge to the Lloyd’s market but I am optimistic about the future.
As always challenges bring opportunities. The Lloyd’s market needs to adapt its business models to harness this capital while always measuring and pricing risk appropriately.
What opportunities can you see in 2014?
In the short-term the opportunities lie in our more traditional markets like North America. US premium rates have been more stable in comparison with many other markets and we are already in a strong position there so we should be capitalising on that.
Equally I think there are good opportunities in Continental Europe, particularly in France and Germany, and we have strategies in place to support Lloyd’s growth there in 2014.
We will also be continuing our efforts to increase Lloyd’s footprint in every growth economy around the world.
You recently appointed Inga Beale as Lloyd’s new CEO, what made her standout as a candidate?
I’m really pleased that we’ve managed to appoint Inga. First and foremost she is an insurance expert with a deep understanding of the insurance and reinsurance industry.
Secondly, she has experience of being a Chief Executive and she knows Lloyd’s well. She has also spent much of her working life outside the UK and her international experience means she couldn’t be in a better position to lead Lloyd’s international growth. This combination made her the ideal candidate.
In 2012 you set out a strategy to make Lloyd’s the global centre for specialist insurance and reinsurance by 2025. What progress has been made on this vision?
As the initiative sets out, the plan is to grow Lloyd’s business, especially in the faster growing markets, and to truly internationalise the Lloyd’s underwriting community.
Under the leadership of Vincent Vandendael, our Director of International Markets, new strategies are in place for a number of priority markets and we’re making good progress on delivery.
We’ve applied for a licence to open a branch of our Shanghai hub in Beijing, and we are increasing our footprint in South East Asia. In Turkey we’re making good progress on obtaining a licence and we’ve laid the foundations for development in Latin America this year too.
BRIC or MINT?
In 2001 journalists started to talk about BRIC countries (Brazil, Russia, India and China) as being the next powerhouse economies. Quite rightly this emphasis has changed as the BRICs become more developed. MINT countries (Mexico, Indonesia, Nigeria and Turkey) are where growth is anticipated next.
I think MINTs are the right places to focus. Lloyd’s Vision 2025 is intended to be dynamic and will adjust as time passes to cater for changes in markets.
What do you enjoy most about working in the insurance industry?
Two things stand out; firstly, it provides a socially useful function for business, communities and world economies in terms of risk protection, mitigation and transfer. The job we do is absolutely vital and often I don’t think that’s fully appreciated.
Secondly, the insurance community, which is truly global, operates on the basis of people competing hard, but with a measure of integrity and trust. I find it very powerful that it’s a business built on relationships, often very long-standing ones.
What do you enjoy the least about the industry?
There’s nothing I dislike about insurance! But there are challenges, and I think sometimes as an industry we can be a bit inward looking; we need to look to the outside world more and stay on top of emerging risks.
Increasingly there is a difference between the risks that companies want covered and the products that insurers are providing. This came out very clearly in Lloyd’s 2013 Risk Index. In order to stay relevant insurers need to evolve continually to meet customers’ needs.
What’s your new year’s resolution?
More sailing this year than I did last year!