Prioritising Australia: Lloyd’s Chief of Markets Patrick Tiernan
Leading, innovating, growing Lloyd’s is on the front foot again as it aims to guide the industry through post-covid changes and challenges By John Deex
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ince 1688 the venerable Lloyd’s market has been a pioneer of insurance coverage, and breeding ground for new ideas. Now, after a period of remediation and covid-induced limitations, Lloyd’s is looking to reclaim its reputation for innovation. It’s also prioritising growth again – but sustainable growth – while carrying out a comprehensive modernisation project at the same time as bringing through vital improvements in diversity and culture. A vision of a post-covid era Lloyd’s is emerging, and Australia plays a key part. During Insurance News’ visit to the iconic Grade 1-listed Lloyd’s building in London’s Lime Street, Chief of Markets Patrick Tiernan confirms the local market is of “paramount importance”. There’s some debate over whether it’s the third or fourth largest Lloyd’s market (Canada may have nudged ahead), but Mr Tiernan says it’s not just about size. “The size of the premium is very important, but the relationships with the customers and the roots we have in Australia are deep,” he says. “The relationships we have with regulators and distributors on the ground are very important to Lloyd’s and we [cherish] them dearly. “I’m desperate to get to Australia this year to demonstrate how important it is to us from a markets perspective.” Lloyd’s took a long, hard look at itself in 2018 and 2019 as profitability plunged. It pledged to crack down on underperforming syndicates, and avoid “bad business”. In the words of then recently installed Chief Executive John Neal in January 2019, Lloyd’s vowed to never again “allow our hand to slip from the tiller and let the market drift into stagnant waters”. This focus caused some issues in
Australia, as Lloyd’s capacity was harder to come by in certain sectors, but Mr Tiernan says that “necessary phase” is now finished. “I wouldn’t call it retreating, I think it was just taking a look at the book and ensuring that there was sustainable profitability that would maintain our strength with regulators, with rating agencies, and with customers. “We believe that a lot of that remediation has been done and done well by the Lloyd’s market, and that 85% of the syndicates have earned that right to look forward through a different lens – through the lens of looking to grow, but grow sustainably.” Sustainable is the key word. Mr Tiernan is adamant that the last thing the market needs is to undo the good work of the past three years, requiring another correction in years to come. “What the market is focusing on and what we’re supporting is sustainable and profitable growth. “I think it’s fair to say that for those syndicates and managing agents that have demonstrated that record of profitability, they’re not being held back by Lloyd’s.” Growth for Lloyd’s in Australia has been outstripping the average, and Mr Tiernan sees plenty of opportunity. He says Lloyd’s thrives when it’s doing things others can’t by virtue of its syndication arrangements. In practice this can mean specialist underwriting, innovative products, and greater efficiency. But he won’t put a number on growth targets for the local market – or anywhere else for that matter. “That’s not the way we think about it. We set top-line targets at our peril. “Our non-financial target is to increase our relevance and increase the level of consideration given by clients and insurers in Australia to Lloyd’s as a desirable, necessary,
and welcome solution to risk problems. “If we are higher up the dial when those conversations, those thoughts, are happening, that’s success for us.” Mr Tiernan singles out cyber as one area where syndicates still need to be particularly careful. In a market that’s maturing so fast, the pitfalls are clear, and Lloyd’s has 20% of the global market. “We’ve got a big responsibility to be on the front foot in terms of monitoring, facilitating, and maturing that market.” Lloyd’s is playing a key role in answering questions about cyber before they’re asked. Cyber war clauses are one example of an area that could “one day be challenged”. “In times of crisis, a lot of heads turn to Lloyd’s when they think about insurance-related matters. “And we are seeing that at the moment in relation to the conflict in Ukraine. But as we think about cyber and we think about other classes, we cherish our reputation for innovation.” Mr Tiernan says that reputation may have been forgotten by some over the last few years due to the emphasis on remediation. But the work has carried on, with the Lloyd’s Lab producing some “fantastic innovation”. However, with a reputation for innovation, comes responsibility. “We have a responsibility to continue to look ahead, look over the hill, bring in expert voices from the industry and ensure that we are thinking about the next issues.” A “vacuum of certainty” leaves nobody happy, Mr Tiernan says, and “closing down disparities in understanding” is a major focus for Lloyd’s, leading to better customer outcomes, and increasing trust in the industry.
insuranceNEWS
June/July 2022
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