Bruce Carnegie-Brown, the new chairman of Lloyd’s, says that the 300-year-old insurance market needs to do more to modernise itself and that progress so far has been “lumpy”.
Mr Carnegie-Brown joined Lloyd’s in June, with the market undergoing a technological overhaul. Insurers and brokers complain that it is an expensive, old-fashioned place to do business. There are fears that, unless it makes itself more efficient, people will buy and sell their insurance elsewhere.
Speaking to the Financial Times in his first interview since taking the post, Mr Carnegie-Brown says that modernisation is a priority. “The issue is can we be competitive. Lloyd’s has a terrifically strong reputation around its underwriting performance. What lets Lloyd’s down is its cost structure.”
“People arrive . . . with files of documents. Those documents have to be photocopied, and those photocopies have to be scanned and digitised. If it was in digital form right at the beginning we could reduce the costs for the brokers in bringing business to Lloyd’s, reduce the costs for the underwriters in capturing the data and improve the quality of analytics.”
“There isn’t anyone who runs a syndicate here who isn’t aware of the need to create digital solutions to challenges and there isn’t anyone in the millennial generation joining Lloyd’s who doesn’t get frustrated with the fact that they have better technology at home than they have at work.”
“Until we convert everything from analogue to digital, we’ve got unnecessary costs.”
But despite a big push to digitise the market, Mr Carnegie-Brown says that progress has been patchy.
“Progress is lumpy because self confidence is not as high as it needs to be,” he says. “Lloyd’s has tried to modernise before and it hasn’t been terribly successful, so people are sceptical of this but it’s a mindset issue not a technology issue.”
A decade ago an electronic trading platform called Kinnect was shut down after it failed to win widespread support in the market. More recently there were hopes that insurers and brokers would use iPads. Despite those efforts, face to face meetings and paper documents still rule.
Mr Carnegie-Brown says that a system designed to allow brokers to place business online had taken longer to launch than expected because it had to be adapted for higher volumes of business.
“Some of that upgrade has taken a bit longer than we wanted and therefore some of the adoption of the system by brokers is slower than we wanted,” he says.
A newfound enthusiasm for data ownership is also holding the market back.
“Nobody cared [about data] when it was in analogue form because nobody read it but in digital form suddenly it has huge value and so there are people who try to create obstacles to free movement of that data,” he says.
Before joining Lloyd’s Mr Carnegie-Brown was chairman of Moneysupermarket, the price comparison site. He hopes that the sort of data processing now common in high volume consumer insurance can be replicated in the commercial insurance world.
He also called on the wider insurance industry to move with the times.
“I don’t think the industry is doing enough to innovate,” he said. While there has been progress in developing new products such as cyber insurance, Mr Carnegie-Brown says that insurers need to do more to adapt their products.
“Insurance has been writing property cover for hundreds of years,” he says. “ If you look at the largest companies by market cap now they are mostly characterised by intangible assets rather than tangible assets and we’ve got to make sure the industry is innovative enough to respond to those opportunities.”
Insurers, he argues, need to do more to offer cover for companies’ brands and reputations rather than focusing on covering physical assets.