Lloyd’s of London plans to halve the cost of buying insurance through the 330-year-old market as part of a strategy to restore the fortunes of the company.
Chief Executive Officer John Neal said he planned to cut the cost of insuring risk from 39% of premiums to 30% within the next two years before lowering it again to 20% within five years. The cost of taking out insurance at Lloyd’s is almost unchanged from 1990, according to the company’s own statistics.
Neal presented a strategy document Wednesday setting out how the company could modernize its market and fend off rivals that currently undercut it. The CEO, who took the top job six months ago, unveiled six ideas to make Lloyd’s more efficient. They included an electronic platform to match insurance buyers with syndicates and a streamlined process for insuring less complex risks.
Lloyd’s is inviting responses to these ideas over the next 10 weeks. The strategy is Neal’s answer to criticism of Lloyd’s business practices. The CEO of Chubb Ltd. has called for an overhaul of Lloyd’s business model, saying “that was a model that worked very well before a globalized world and before a digitized world.”
The firm’s business model is not the only area where it has come under fire. A Bloomberg report in March revealed a deep-seated culture of sexual harassment, with 18 women in the male-dominated insurance market describing near-persistent harassment.
While Wednesday’s consultation document made no mention of women or harassment, it did commit Lloyd’s to “create an inclusive culture in which everyone is respected and valued.”
Neal said that Lloyd’s should grow in size if it successfully cuts costs and makes it easier for companies to use the market.