The insurance industry’s role is not just about helping clients recover but also building resilience, says John Neal
With recent events such as the global pandemic and the war in Ukraine having contributed to “the most uncertain landscape seen for generations”, “awareness of insurance and the value it can add has never been higher”, Lloyd’s CEO John Neal told delegates at the Marsh McLennan Rising Professionals’ Global Forum.
He said the global pandemic in particular had demonstrated that “when the unexpected happens, people look to those in the risk management business for answers, and a framework for bouncing back”.
“Stuff will always go wrong. Try as we might as humans, we’re never going to be able to eliminate risk from our lives. Sometimes it just takes being in the wrong place at the wrong time… as I found with my recent cycling accident.”
He continued: “There will always be a need for insurance. It’s a core part of a functioning society, helping people to prepare for the worst and to live more confidently in everyday life. What we all do is incredibly relevant and it will always be so.”
Neal said the pandemic has also demonstrated the value of having “really clear policies” and the ability to “explain to customers really articulately when they have cover and when they haven’t got cover”.
He said it had also clarified the insurance industry’s role as not just being about helping clients to respond but also in building resilience.
“There’s no point waiting for these so-called ’black swan’ events to hit and then writing a cheque and saying great, we’ll wait for the next one. We need to understand the causes. We need to share our insights and help society prepare for inevitable future events. And that’s what we’re trying to do at Lloyd’s and across our sector.”
Neal said that even though insurance is a “timeless and essential” product, “I don’t think there’s ever been a more interesting time to be in our industry”.
“There’s a whole list of meaty issues to tackle,” he said. “How we respond to climate change has both long term and immediate impacts, social and environmental costs, and local and global repercussions – and insurance is far from on the sidelines.
“We’re right at the frontline of responding and we’re driving climate action through the products that we’re able to create.”
Brace for high inflation
He also cited the impact of high inflation and relatively low growth on the macroeconomic environment, suggesting that the insurance industry needs to think about the risks created for clients, supply chains and organisations.
The Lloyd’s CEO also referenced the tragic situation in Ukraine, where Russia’s invasion had led to “devastating human cost and a reordering of the energy, political and technological priorities that we’ve yet to begin to fully understand”.
“The challenge for us, as insurers, is to manage these complex risks and to do so with the sensitivity it requires, while at the same time being forward-thinking enough to think about the challenges that could arise in a month, in a year, and possibly even in a decade,” he said.
“Where does the current crisis leave us in the race to Net Zero? What does the current crisis mean for our future relationship with China or with India? And how’s that going to be impacted in the years ahead?
”We cannot just look to the politicians for these answers – we have to become the experts ourselves,” he concluded.