Inga Beal Describes Lloyd’s In Miami Speech

In a recent speech given to during a Meet the Markets meeting in Miami Lloyd’s of London CEO described Lloyd’s of London and what makes it unique. Below are excerpts from her speech:

Some of you here may not be so familiar with Lloyd’s, so I have a little explaining to do –we are the only specialist insurance and reinsurance market in the world. We have a truly global reach, operating in more than 200 countries and territories worldwide. For almost 330 years we have been underwriting human progress; Lloyd’s syndicates insured the first cars; the first planes; and the first satellites. We pioneered business interruption, D&O, and earthquake insurance. Today we are leading the world on new risks like cyber or supply chain disruption.

The world’s largest insurance companies set up syndicates at Lloyd’s in order to write specialist insurance for the world’s largest companies. Today we are home to 57 insurance businesses - or managing agents as we call them. And between them they manage more than 80 syndicates.

Sometimes syndicates compete; sometimes they collaborate. And much of Lloyd’s business works by subscription, where more than one syndicate takes a share of the same risk. This allows Lloyd’s to lead the world in covering large and complex risks.

And we are still a fully brokered market. Lloyd’s has no sales force as such and has outsourced distribution to brokers, who have been critical to Lloyd’s development over the centuries, bringing risks from all over the world to our market.

We also have another source of distribution where syndicates delegate underwriting authority to coverholders, who are also a very important part of our distribution arm. They understand their customers’ risks and needs.

The clustering of broking and underwriting expertise is what gives Lloyd’s our unique edge. If you ever find yourself in London, get in touch to arrange a visit to the Room in the Lloyd’s building – four floors of activity where brokers and underwriters conduct thousands of face-to-face transactions every day. It is this interaction that over hundreds of years has helped forge our reputation for innovation.

In the corporate centre of Lloyd’s, we are guardians of a special feature of the Lloyd’s market – a central mutual fund. In order to protect this fund we approve all syndicate business plans and also set the level of capital that is required to back those business plans. Each member at Lloyd’s has to deposit a certain amount of capital as Funds at Lloyd’s – which means it can only be used to pay claims to Lloyd’s policyholders.

Syndicates also have to make a contribution each year to the central fund which is there to pay out if one of the syndicates doesn’t have enough capital to fulfill their policyholder liabilities.

We are also helping businesses navigate the fast-changing risk landscape by providing insight into new and emerging risks – and by developing new products.

For example, last year, we created 15 new products for cyber insurance. Lloyd’s is renowned for innovation, and through its reports on emerging risks, market intelligence and the combined expertise of the syndicates, Lloyd’s offers businesses in this region additional, bespoke coverage the local market does not have the capacity to offer.

Lloyd’s is helping to grow the insurance market here, and across Latin America.

We support business growth at home and abroad. Through Lloyd’s multiple distribution channels you can access our underwriting expertise and knowledge in more than 200 territories across the world.

All our policies are backed by our Central Fund, which as I mentioned earlier, backs every insurance policy that is written by us. This is unique to Lloyd’s.

And we are investing in innovation and technology to make it easier for you to do business with us. Thank you for joining us today and enjoy the networking.

This mutual aspect of the market makes Lloyd’s totally unique. It also provides the financial strength so desired by our customers. Our capital position remains strong, with our net resources totaling over $35.6 bn at the half year 2016. And all syndicates at Lloyd’s are backed by our excellent ratings – A+ from S&P, A from A.M. Best, and AA- from Fitch.

So that is a very brief overview of who we are, and how we work.

So now to some global industry trends, including a word on market conditions – whether you are an insurer or a broker, it’s tough at the moment.

Low interest rates are attracting new capital into insurance markets. Technology is allowing risks to be packaged up and commoditized, attracting this new capital and driving down prices. Insurers are cutting costs and changing their growth strategies.

Technology is also affecting brokers. Now customers can go direct to insurers, challenging distribution models. Broker facilities are becoming increasingly popular.

At the same time, businesses are finding themselves exposed to new threats such as cyber-attacks and new liabilities created by new technology. Just who is responsible for a driverless car crash?

All of these changes are taking place at a time when we are seeing a change in attitude towards globalization, with both Brexit and Trump’s election based on a more protectionist approach, as I mentioned earlier.

Faced with difficult market conditions, Lloyd’s is working hard to make sure that the ways you access the Lloyd’s market are as efficient and as simple as they can be.

We’re committed to growing our coverholder model. It’s is an excellent way for us to offer local Lloyd’s policies to customers.

Local insurers benefit because by becoming a coverholder, they can partner with Lloyd’s syndicates and increase their portfolio by offering innovative Lloyd’s products. This helps grow the local insurance market.

And it means policyholders can access Lloyd’s products in their country, in local languages and with local services, backed by the extra security of Lloyd’s Central Fund – a mutual fund that sits behind all the policies we write and pays claims in the unlikely event your insurer can’t.

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