Lloyd’s chief says industry’s 10% share of corporate risks ‘is not good enough’
Insurers need to make more effort to cover their clients’ non-physical assets such as intellectual property, according to Lloyd’s chief executive Inga Beale.
Addressing risk managers and insurance buyers at broking group Marsh’s seventh annual UK client event last week, Beale said: “This is an era where assets are as likely to be intellectual as they are physical, where the assets are stored in the cloud rather than in a warehouse, and where supply chains are increasingly global and they stretch all across the world. This is the reality of your worlds, and I think we need to do more to respond to it.
“We know you will still need coverage for your physical assets to protect them from flood and fire but you do need other forms of cover too. And I don’t think we are currently offering you enough of those.
“I think some of [the risks] are a bit too intangible for us to fully understand and therefore to be able to devise a product that is actually useful for you.”
She added: “It is critical for us as an insurance industry that both brokers and the insurers listen carefully to all of you.”
Beale referred to a recent survey by the Federation of European Risk Management Associations (Ferma), which showed that companies are planning to increase the use of their captive insurers by a third for traditional business lines and by more than 40% for non-traditional business lines. If risk managers are diverting more business to their captives, this means less business for the insurance industry.
Beale said: “That alone is potentially a threat to us traditional insurance carriers.”
Beale also noted a comment made by the chief executive of a risk managers’ association, which was quoted in Boston Consulting Group’s recently released study of the London insurance market’s competitive position.
The chief executive said in the report: “The proportion of the corporate risk map covered by insurance has shrunk to perhaps as little as 10%.”
Beale said: “It really isn’t good enough, and lays down the gauntlet to the insurance industry to say: ‘Pick yourselves up. Take on this challenge.’”