Partnership is key to Lloyd's success, says Hiscox

Robert Hiscox urged Lloyd's market underwriters to “move business at the pace of the brokers” today, in an impassioned speech at the Insurance Institute of London lunchtime lecture at Lloyd's.

Calling upon the market to embrace the efficiencies and speed afforded by electronic systems, Hiscox said that such a move was essential if it was to become a low cost provider of insurance. “Sitting in a box and underwriting was a most congenial place to work,” he reminisced, but said that for the underwriter it was now much easier to make a dispassionate, sensible decision when seated in front of their computer.

However, Hiscox also threw down the gauntlet to the broker, a creature which he described as being “very emotional and touchy”. “Why,” he asked “does this industry have such a poor opinion of itself?” Highlighting the challenges faced by the broker in an increasingly complex and volatile risk environment, Hiscox said that he could not understand why this market did not charge a proper fee.

Giving as a recent example the formation of Panther Re, Hiscox's £360m Bermudian side-car, Hiscox said that while the investment house involved had charged a significant fee for its services, the broker had not charged at all. “Why can't brokers get used to the fact that they should charge a proper fee?”

A fundamental problem he said was that the wrong person was paying the broker – the underwriter. “Brokers work for the client and it is the client who should pay them.”

“We want brokers to do business with us to make money,” he added, and the only way to do this is “to invest with them”. To achieve this both sectors, the underwriters and the brokers, must work in partnership, a fact which he pointed out was difficult for many brokers to accept. “But it has to be done if we are to make this work”.