AFL Chairman Toby Esser offers his view from the inside on the modernisation of the London insurance market.
I recently took part in a debate on shaping the future of the London Market. Organised by Insurance Day, the panel took place in May at Lloyd’s Old Library – a beautiful and historic backdrop. The wooden panelled walls served to provide a neat juxtaposition between the old fashioned traditions of the London Market, and the forward-looking subject matter of the panel.
Indeed, this is still an old industry that does things in old-fashioned ways. But my arguments were clear: Insurtech is here for the future, it is challenging the market to reinvent itself. It is vital that people from outside the industry are bought in to help London remain a centre of IP. This market needs to get younger, and we need to bring in talented youth with challenging ideas.
I also asserted that the value chain had to shorten in order to remain competitive. After all, for an intermediary, whether big or small, you must be able to process your business efficiently, and offer some specialty knowledge or service to the client.
I hear the naysayers wondering if their jobs are going to be taken by technology. Insurance is and will remain a people business, but if your job involves just doing what a machine could do, it won’t be long before you are replaced in some form by an insurtech.
At the same time, insurtechs themselves are creating new jobs – they may not be the jobs that we recognise from the insurance industry’s past, but they are increasingly part of its present and most certainly part of its future. The trick to staying in a job is to embrace this change, rather than resist it.
What can be automated will be automated
This market is still predominantly living off being creative, and having access to capital in a quicker way than many other markets can’t match. But it lags far behind in terms of efficiency.
I joined AFL because I saw that CEO Bob Finch and his team were building an offering that was dynamic and modern, and I wanted to see this agile model grow. After all, AFL represents the future of the London Market – and all firms operating within this environment market must look to the horizon and embrace modernisation if they are to continue thrive on the global stage.
Our growth so far has been rapid, with new divisions and talent across our energy, property and marine capabilities, as well as the development of our Incubator division.
This growth has been backed by a clear strategy. We are building a sustainable, competitive and – crucially – an independent London Market wholesale and retail specialist.
The London Market must develop quickly if it is to maintain its position as a global leader – especially given the somewhat destabilising effects of the current protracted Brexit negotiations.
As I have said before, I do not believe Brexit will have a significant impact on the business of Lloyd’s, but it’s certainly an unwelcome distraction at a time when we need maximum focus.
To that end, I believe the move to mandate for adoption of PPL is an extremely positive development. That said, as a body, we are not as far along as we should be, in terms of modernisation, and we need to up the ante to deal with excessive expense ratios. Everyone must get on board.
I applaud the work that Lloyd’s CEO Inga Beale – along with the Lloyd’s management team – has done; she has listened to the syndicates, brought them together as committees to discuss learning lessons from the past, and pushed forward with the PPL mandate.
Now it’s time to strike while the iron is hot and press ahead with the other priority initiatives Lloyd’s has on the table, such as the Central Services Refresh Programme (CSRP), which should greatly improve the speed with which payments are made. But it needs to be in place sooner rather than later.
London has a great future – but actions speak louder than words
At AFL, we recognise that the only positive future for the London market is one that fully understands and embraces disruptive insurtech.
With that in mind, we are committed to a growth that will be both organic and sustainable – but not at a snail’s pace; in fact, that rate of evolution will only lead to extinction in the new global marketplace. AFL’s Incubator, housed within our expanded and remodelled London hub, is testament to the firm’s determination to be at the heart of the insurtech revolution.
At a time when big decisions must be made to ensure that London remains an attractive place to do business, and indeed increases its attractiveness in a competitive world, AFL will continue to put its money where its mouth is and lead the way to a market that merits its place at the top table in the 21st century.