Lloyd’s of London chief executive John Neal has backed the marine insurance sector to recover following cutbacks and withdrawals of insurance capacity by at least 11 syndicates operating in the market over the past year.
Neal said he is about to unveil a new prospectus outlining his vision of the future of Lloyd's and he expects marine to play a key role in the historic insurance market’s future.
Lloyd's of London's history goes back more than 300 years when it began by writing marine cargo insurance.
“There is no reason why marine can’t return to the forefront of what we do at Lloyd's,” he told the London Marine Insurance conference today.
The marine market has seen as massive reduction in capacity since Lloyd’s managers started an internal profit drive after reporting a $13.4bn underwriting loss in 2017.
Neal said that the marine market had become a key area of hard hitting cutbacks in the Lloyd's market.
“It was a tough and challenging process but it was absolutely necessary. Unprofitable business had eroded 87% of Lloyd’s profit. Marine, hull and cargo came into sharp focus because it had not been performing for some time,” he said.
The Lloyd's hull and machinery market has been running up losses for the past two decades.
Despite the departure of several syndicates from the marine market, including the Skuld, Standard and Aspen syndicates, Neal insisted no one had been expelled.
“We did not shut down any classes of business,” he said.
However, he said that following the cutbacks, Lloyd’s underwriters had told him sectors of the marine market had started to see premiums recover recently, hinting a recovery is on its way.
But he warned for the Lloyd's market to be successful it would have to embrace data technology noting a “lack of progress on digitalisation”.
He also said Lloyd's needs to tackle its cost issues and improve claims performance if it is to recover profitability. “We need to make sure we are fit for purpose,” he said.
But overall, he is optimistic that in the future the Lloyd's market can continue to grow.
In response to the suggestion that Lloyd's would scale down and be more focused after its reforms he said: “Why, can’t we be bigger and better?”
