Lloyd’s must get a digital grip
Lloyd’s must get a better grip on its
digitisation plans, or it will potentially
lose ground to other jurisdictions,
according to Darren Wray, chief executive
officer of IT consultant Fifth Step.
“We’ve all seen the recent coverage of the
future of Lloyd’s and the latest high level plan
of how Lloyd’s will support digitisation,”
Wray told Monte Carlo Today.
“It seems to me that Lloyd’s is going
through a cycle every few years of coming up
with new digital transformation initiatives,
which they execute to some extent before
they change their minds slightly, or they get
another of the big four consultants to come
in, who come in with a slight variation—and
around we go again.
“Another £50 million is piled into the
spending pot, to be spent over the next couple
of years. I’m not sure the market can sustain
give the market services it doesn’t necessarily
want. He claimed market participants simply
want to be able to work in a standard way to
maintain efficiencies, ideally keying data in
only once at the start of the full life cycle of
“Placing Platform Limited (PPL) has done
well; it’s further along than any of the other
executions, but it’s still not anywhere near
as far along as it should be at this stage,
especially for the amount of money that’s
been spent,” said Wray.
As a consequence, he said, there was a
danger that Lloyd’s, and by extension London,
might lose ground to other jurisdictions that
may steal business.
As he pointed out, this business might
not seem consequential at the time, but with
the uncertainty of Brexit looming, this could
further weaken London’s position.l
that, and I’m not sure that London as an
insurance centre can also sustain that.”
Wray believes the approach that Lloyd’s is
taking is flawed, and that Lloyd’s is trying to
Fitch: ratings outlook promising, underwriting cycle flatter
The rating environment is more positive
than it has been for some time, Brian
Schneider, senior director, insurance,
Fitch Ratings, told Monte Carlo Today.
“A lot of individuals involved in the
business don’t remember the last time there
was a hard market,” Schneider said.
“We’re getting potentially towards a hard
market—it’s probably more of a firming
market at this point but we’ll see how things
go through with pricing into next year.”
He noted that the market is not experiencing
the more capital-driven aspects seen in previous
hard markets that followed big loss events.
“We certainly have had big loss events
but they haven’t drained the level of capital
that they did in 2001 with 9/11 or with the
hurricanes in 2005.
“They were capital-defining events which
followed the more normal cycle of capital
depletion, fewer supply opportunities for
price increases, and new capital coming in
with the formation of companies, particularly
in Bermuda,” he explained.
“We have certainly seen levels of losses that
were similar, if not higher, over the last two
years but there hasn’t been that capital drain,
and part of that is the way companies now
manage capital, which is smarter.
Brian Schneider (left) and Graham Coutts
“There’s better risk management and
they’re ceding a lot more business to the
capital markets than they have before.”
Graham Coutts, senior director, insurance
ratings at Fitch, agreed there is strong
capitalisation in the sector.
“What we’ve seen following the 2017 and
2018 losses is that overall levels of capital in
the industry haven’t deteriorated that much,”
“People have been willing to recapitalise
and more money is flowing back into the
sector. A consequence of that is that pricing
does remain under pressure, so what we see
is a much flatter underwriting cycle than we
might have seen in the past.
“It’s a reflection of the fact that although
you have these big losses, the reinsurers are
quite resilient to those losses and there aren’t
such big opportunities for rate improvements
“An interesting theme of recent
years is that following losses you see
rate improvements in the particular
geographical areas and lines of business
that took the hit, but not the wider rate
hardening you may have seen in the past.
“You don’t see across-the-board rates
improving on all sectors and all lines,” he
Monte Carlo Today Day 4 Wednesday September 11 2019