Leading insurer calls for end to delay in implementing change at Lloyd's
Lloyd's must become an "elite group of innovative underwriters" in order to compete against huge reinsurance and insurance companies, warned the chairman of Hiscox Insurance.
Speaking to the Insurance Institute of London last week, Robert Hiscox said the 314-year old market needed skilful insurers and would have to modernise rapidly to survive.
"Simplify the capital into shareholders, manage the centre strongly and it will have a glittering future as the hotbed of creative and profitable international underwriting," said the former deputy chairman of Lloyd's.
"Delay and try to satisfy every minority, and it will have no future."
Hiscox said Lloyd's had "suffered greatly over the past decades from the handicap of totally outdated provision of capital and a ferocious resistance to change".
He said: "Today, we are not only up against big balance sheets, but also against some very highly paid and skilful underwriters outside Lloyd's."
Hiscox welcomed recommendations made last month by the working party set up by Lloyd's chairman Sax Riley and by the management consultant Bain & Co. He encouraged the Council of Lloyd's to implement them quickly. The proposals include making Lloyd's a franchisor, ending three-year accounting and phasing out Names with unlimited liability.
Commenting on one-year accounting, Hiscox said: "We must totally welcome a move which will bring us into line with the rest of the insurance industry.
"GAAP accounting is essential. It will stop the appalling delay in seeing and addressing problems that are hidden in the three-year accounts."
But, he added, Lloyd's suffered from "the considerable disadvantage of lack of capital".
Hiscox said: "I would like to see promises from the franchisor for efficient provision of low-cost central services and for provision of a low-cost structure for the market."
He added: "Lloyd's is a brilliant idea. The market is still the most entrepreneurial environment for talented underwriters in the world, and the only market where smaller firms can use the best name in insurance to write international and big business."