In­sur­ance is more im­por­tant than ever in our un­pre­dictable world

The Sunday Telegraph - Money & Business - - Business - Bruce Carnegie-brown is the chair­man of Lloyd’s BRUCE CARNEGIE-BROWN

It is now one hun­dred days since I started my role as chair­man of Lloyd’s, the world’s big­gest in­sur­ance and rein­sur­ance mar­ket. Dur­ing that time, a se­ries of dev­as­tat­ing nat­u­ral catas­tro­phes has struck in the Caribbean, the US, Mex­ico and South Asia. As a re­sult, gov­ern­ments, busi­nesses and com­mu­ni­ties around the world are re­ly­ing on Lloyd’s to help them re­build their lives and liveli­hoods. From the Lloyd’s build­ing in Lon­don, on any given day we pay out about $50m (£38m) in claims. Of course the last few weeks have been any­thing but nor­mal. And these dis­as­ters re­mind us of our pur­pose at Lloyd’s and in the wider in­sur­ance mar­ket, which is to help gov­ern­ments, com­mu­ni­ties and peo­ple re­cover more quickly from dis­as­ter, by pro­vid­ing them with the fi­nan­cial re­sources they need.

The dev­as­tat­ing im­pact of these dis­as­ters is also a re­minder of the need for gov­ern­ments to be bet­ter pre­pared for the im­pact of cli­mate change. In­sur­ance can­not be a sub­sti­tute for the prepa­ra­tions nec­es­sary to mit­i­gate the im­pact of these dis­as­ters. But in­sur­ance has a very valu­able role to play in the re­build­ing work. What is emerg­ing from these re­cent tragedies is the level of un­der-in­sur­ance that per­sists even in wealthy economies like the US. Gov­ern­ments must do more to pro­mote the ben­e­fits of in­sur­ance to pro­tect their cit­i­zens and must re­sist the temptation to raise taxes and build pro­tec­tion­ist walls around the free move­ment of in­sur­ance cap­i­tal. Lloyd’s is in the busi­ness of al­low­ing gov­ern­ments to ex­port their risks and we have al­ready be­gun pay­ing hun­dreds of mil­lions to vic­tims in the Caribbean and the US.

In fact, Lloyd’s has paid out over $90bn in claims over the last five years, and the great ma­jor­ity of these claims have been paid in sup­port of dis­as­ters thou­sands of miles away.

So ad­vo­cat­ing loudly for the value rep­re­sented by in­sur­ance, and to ar­gue against pro­tec­tion­ism and ex­ces­sive tax­a­tion that re­sult in un­der-in­sur­ance and hard­ship, must con­tinue to be a pri­or­ity for Lloyd’s.

Not­with­stand­ing the con­tin­ued strength of Lloyd’s, which was high­lighted in last week’s in­terim fi­nan­cial re­sults, a se­cond pri­or­ity must be to con­tinue to ad­dress the very sig­nif­i­cant in­ef­fi­ciency that per­sists in com­mer­cial and whole­sale in­sur­ance mar­kets. All mar­ket par­tic­i­pants must work to change that. The Lon­don mar­ket has mod­erni­sa­tion pro­grammes and it is im­per­a­tive these are im­ple­mented quickly.

A third pri­or­ity is to con­tinue to pro­mote and pro­tect the dis­tri­bu­tion of our prod­ucts glob­ally: to pro­tect the li­cences we have in over 200 mar­kets; and to seek li­cences in new mar­kets. That is why we wel­come the Prime Min­is­ter’s words about want­ing to reach agree­ment with the EU on is­sues in­clud­ing tran­si­tional ar­range­ments and im­mi­gra­tion.

A fourth pri­or­ity is in­no­va­tion. Tech­nol­ogy is cre­at­ing new risks and we must de­velop prod­ucts that re­spond to these risks. Lloyd’s rightly has a global rep­u­ta­tion for its lead­er­ship role in in­no­va­tion in in­sur­ance. But the in­dus­try it­self is not yet in­no­va­tive enough. Lloyd’s is a leader in the de­vel­op­ment of cy­ber­risk pro­tec­tion poli­cies, but other new prod­ucts are needed.

If Lloyd’s did not ex­ist to­day, no one would in­vent it, and yet it is a bril­liant in­ven­tion that has shown a ca­pac­ity to adapt, to change and to grow for more than 300 years.

Our abil­ity to re­spond ef­fec­tively in times like these is what sets us apart. As I write, teams of peo­ple from the Lloyd’s mar­ket are help­ing com­mu­ni­ties and busi­nesses. And I be­lieve that by con­tin­u­ing to in­vest in im­prov­ing the mar­ket’s pro­cesses; to ad­vo­cate for the free move­ment of in­sur­ance cap­i­tal; and to pro­mote a cul­ture of in­no­va­tion, we will en­able Lloyd’s to go on ful­fill­ing our pur­pose of help­ing our clients re­build their lives and liveli­hoods af­ter tragedy has struck.

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