Lloyd’s chairman highlights three main challenges in insurance sector

Cost, confidence and relevance are currently the three main challenges for the insurance industry.

That was according to Lloyd’s chairman Bruce Carnegie-Brown, who highlighted his concerns during a breakfast hosted by Chartered Insurance Institute president and Swiss Re chief executive Russell Higginbotham this morning (20 September 2023).

Carnegie-Brown began by saying that the cost of delivering products in the wholesale and reinsurance markets was currently “too high.”

These high costs, in his view, had left penetration rates in developing markets lower than they should be.

Confidence

Meanwhile, Carnegie-Brown also felt there was a confidence gap at the point of exchanging insurance contracts, meaning that consumers may not trust what was being offered to them.

He said the profession has an “obligation” to address this issue “together” and suggested that parametric insurance “could be the answer”.

A parametric insurance model is where the trigger and claims payout are preset, meaning claims processing time is reduced.

Relevance

Turning to relevance, Carnegie-Brown said that there was “more risk around than there has ever been”, with customers reaching out to brokers for support.

Therefore, he emphasised the industry’s relevance in the face of increasing risks, notably those tied to climate change.

He said that the industry had a duty to provide “incredibly strong risk propositions” that could directly increase the sector’s relevance.

And more generally, he warned that the insurance industry needed to “up its game for our customers”.

Diversity and inclusion

Meanwhile, Carnegie-Brown felt there was a need to “move the dial” on gender and diversity across the insurance industry.

Earlier this year (4 July 2023), Lloyd’s revealed that the latest data from its fourth market policies and practices return showed the market reaching 32% of women in leadership positions as of 31 December 2022.

The marketplace has set a target for it to reach 35% by December 2023.

While noting recent improvements in both gender representation and of minority ethnic groups in senior positions across the insurance industry in the UK, Carnegie-Brown said going further remained a “key challenge” for the sector.

Therefore, he stressed the importance of making further advancements within a reasonable timeframe.