The message from industry leaders at last week´s Insurance Insider London Market Conference (LMC) was clear – London needs to be bold and recapture its reputation if it plans to stay relevant and competitive.
The yearly LMC always brings out the big gun speakers, and this year was no exception. Julie Page, CEO of Aon UK Ltd urged for a more interconnected market and Scott Purviance, CEO, AmWINS Group gave some insights on how our peers from across the pond perceive the London Market. Bronek Masojada, CEO, Hiscox and Chair, PPL Ltd gave an update on PPL´s progress, and provided perhaps the most memorable quote from the conference when he likened the market reform to wildebeest migration quipping that “unfortunately, some get eaten by crocodiles - but the vast majority make it across the river.”
However, this year there was a palatable sense that all speakers were united in conveying the same message – the London Market needs to work harder to find its voice in the current political and economic agenda, put the customer first and reclaim its reputation for innovation.
Interconnect and own your reputation
In his speech, Scott Purviance encouraged the London Market to get rid of the noise and be willing to change without losing its entrepreneurial underwriting experience. To mend it´s brand, he suggested the market needs to have a more collaborative approach.
Presenters spoke about a fractured and inwardly focused market that needs to operate as one rather than as individual firms. There was talk that interconnected risks need an interconnected market and London needs to radically assess how business is done to remain relevant and sustainable or risk losing its position for global excellence.
The theme of “owning and recapturing our reputation” and driving appreciation of the industry was consistent throughout the day. The collective view was that the challenge to London would most likely not come from a physical hub, such as Dubai or Miami, but from a digital hub.
One speaker said that innovation in the London Market was mostly driven by underwriters´ risk-taking instincts, and the market should look to combine this instinct with technology and intelligent data to create new answers to old questions and provide greater value to the customer and remain competitive.
Andrew Horton, CEO, Beazley and Chair, London Market Group, gave an update on PPL´s progress and the LMG´s TOM efforts. He said that although a solid foundation has been built, which has achieved great results in all of the LMG´s work streams, the key focus is on changing behaviors as “building tools are useless if no one uses them.”
There was talk of lines of business still operating in siloes and holding the London Market back from remaining competitive. The broad agreement was that interconnectedness is core to the future of the market.
The war for talent
As the market faces a potential skills gap, one speaker said we are facing a “the war for talent.” One presenter said that we are fast “approaching a cliff of aging executives,” which supports a 2017 report by global management consulting firm McKinsey & Company predicting that one-fourth of the insurance industry’s workforce will retire by 2018.
It´s no secret that the insurance industry struggles with its image as an exciting and forward-thinking workplace for graduates considering where to work, so it was surprising to hear one presenter mention that a survey his company recently undertook with industry executives showed that 93% of respondents felt that they didn´t need to attract talent outside of the market. The consensus was that more should be done to attract a diverse workforce by looking to actively engage with colleges to initiate recruitment and training programmes.
Let´s get digital
Previous LMCs have covered the digitization of the market, but this year presenters were blunt – embracing technology is no longer a side-project, it´s a must to survive. Working for a technology service provider, it was fantastic to see industry leaders claim that technology is right at the heart of how the market needs to change, and that “the reluctance to embrace technology is a millstone around our neck.”
There was rebuttal around the perception that there is fear at the top that technology will negatively disrupt operations. Several presenters agreed that industry leaders are very articulate around technology and eager to digitize operations. However, with the nature of business changing, brokers and underwriters need a degree of digital skills to operate in the future and the market should do more to support them.
Presenters repeatedly pointed out that any digitization efforts should be aligned with business growth strategies and managing risk in an efficient way whilst not compromising people´s jobs. One speaker said that they don´t see technology as a threat, rather it creates opportunities, especially in distribution. The agreement was that while we shouldn´t discount any technologies we have today that help the market interact, more needs to be done to embrace technology, but never at the cost of people’s ability to negotiate risk in person.
Cherish the creatives
Panelists on the InsurTech session agreed that it´s becoming easier to incubate an idea and take it to market as regulators are becoming more open and supportive. However, panelists raised the point that a few in the insurance industry market struggle with InsurTech´s image. One panelist quipped that “some in the market won´t listen if you´re not wearing a suit, it shouldn’t be able the stitching on your suit but about the ideas you can bring to the market – good ideas can come from anywhere and organizations need to have a mechanism to support that.” Hear hear.
The panel discussed InsurTech´s focus to replicate processes and digitize those processes so everyone´s time can be focused on driving better value. However, some said that the industry still lacks a crisp and clear vision on how to do this. Amazon was cited several times as a company with a clear vision when it comes to embracing innovative technologies.
A question asked during the panel was - should we innovate more quickly? The resounding answer was yes, providing that the industry foster a spirit of accepting failure when experimenting with a concept that may or may not work. Ideas are fragile and need nurturing to make them grow.
One panelist gave an example of how U.S. organizations are more accepting of failure by citing that speakers at conferences talk proudly on stage about their projects failing. His message – “cherish the creatives” – give them room to create without the fear of failure.
One panelist suggested that organizations should look to implement something that is easy to turn on and off and doesn´t require massive internal integration. The advice was that organizations should do their due diligence, spend a lot of time reviewing and ensuring that their idea resonates with the market. Focus on the problem bit and find the teams – system providers, InsurTech, StartUps – and work with them. Think big, start small and for heaven´s sake, stop thinking of failure as a cost or being bad.
From gig to gig
The gig economy has emerged and is here to stay. One speaker said it was the fastest area of economic growth and “we have to catch up with that.”
According to one presenter, the millennial market is the most uninsured generation in the market - they value single assets rather than combined assets, and they lack a range of flexible insurance solutions that serve their requirements. The personal needs and behaviors of millennials will translate to a client needs in the workplace, and although we sit in the P&C insurance market, the entire insurance industry needs to face this challenge together.
The clarion call was clear - London has historically been a great centre for innovation, but with everything we are facing as a market place how much longer will this last unless the market radically changes the way business is done.