September 2016
Lloyd’s CEO Inga Beale played down the challenge to the market’s prospects posed by the pending Brexit, describing the outcome of the recent referendum as “extra hassle”.
Speaking to The Insurance Insider at the Monte Carlo Rendez-Vous, she said: “Most people I speak to are not concerned about it,” acknowledging that market modernisation and broader distribution challenges are more pressing issues for the market.
Beale also gave a strong signal as to the likely path that Lloyd’s will take as it attempts to safeguard the small share of continental European insurance business that it currently writes.
The Lloyd’s CEO said that the Corporation would either look to set up individual branches in key EU countries, or set up a capitalised company in Europe that could resemble Lloyd’s China in some ways.
Taking a country-by-country approach to negotiating access would “take longer” and “require more resource”, as well as being “more costly”, Beale explained.
The other approach – which she described as “a mirror Lloyd’s, a subsidiary model” – would be more direct.
However, the CEO said that it could create complexity around the way that capital is allocated between syndicates and the employment status of staff.
Beale said that director of global markets Vincent Vandendael, who is leading for Lloyd’s on Brexit, and his team are scheduled to finish their analysis of the market’s options by year-end.
After the analysis is complete, Lloyd’s will present the findings to the market and engage in a dialogue with stakeholders on its options, she added.
Beale stressed that Lloyd’s had the capacity to handle Brexit without other organisational priorities suffering.
“We have only de-prioritised one area – the [market loss] index,” Beale said, referencing the Corporation’s recent decision to mothball a major project that would have facilitated the creation of index-related products for the London market.
Beale’s comments followed a high profile speech at a London City dinner from Lloyd’s chairman John Nelson last week that centred on Brexit.
The executive, who campaigned for the UK to remain in Europe, tried to link the UK’s proposed withdrawal from the EU to the regulatory environment by asserting the need for the country to maintain its competitiveness.
“There is an opportunity for us to look at the regulatory framework objectively and ask ourselves: is it giving us every chance to succeed?”
Nelson went on to tell his audience that although a tough and prudential regulatory regime was necessary, “there is scope to ask ourselves whether some of the rest of the regulatory framework is overly burdensome”.
“The short answer is that it is,” he concluded.
