The market’s chief development officer and head of European branches explains the role of Lloyd’s across the Channel
As Brexit Day passed, seemingly, without a hitch, all eyes now turn to how Britain’s exit from the European Union (EU) could potentially impact insurance markets and trading, both in the UK and Europe.
With this in mind, Insurance Times sat down with Mark Cooper, chief market development officer and head of European branches at Lloyd’s Europe, during the annual Amrae conference in Deauville, France, to discuss what it means for the marketplace to set up shop in Brussels
IT: What is the role of Lloyd’s Europe, especially in conjunction with Lloyd’s of London? What is its key function?
Mark Cooper: For us, it was the opportunity to create the certainty for our clients. I think that’s the important thing. So once we had the referendum in 2016, Lloyd’s acted extremely quickly as a market to make sure that we had a model in Europe that gave the protection to our clients in order for them to be able to have assurances of underwriting and claims and the financial security of the Lloyd’s market in a post-Brexit European region. So, the purpose was very clear; it was to provide that certainty, that continuation of cover to our EEA policyholders.
IT: How does Lloyd’s Europe plan to deal with Brexit and the potential impacts here?
Cooper: Well for us, Brexit, it’s been and gone now. If we look back at the last couple of years, our emphasis and purpose was around having a model that enabled those passporting rights, that continuity to continue, so that work has been completed and we have been operational since 1 January 2019; now, all non-live EEA risks have been written through the Lloyd’s insurance capacity model. We’ve still seen a significant amount of cross-border reinsurance going directly into overseas markets, particularly London, and of course that’s perfectly permissible and indeed in many ways encouraged because LIC was first and foremost set up to be an insurance vehicle, and I think that’s important. So, those cross-border flows of reinsurance into the UK in particular still continue, even post Brexit. There’s one exception to that in Germany, but all other EEA states have confirmed their position.
IT: What is your involvement with the Future at Lloyd’s strategy? What has been achieved to date regarding the strategy and what is on the agenda for the rest of the year?
Cooper: The blueprint was launched on 5 September, so it’s still relatively early days in terms of actual outputs. But I think there’s certainly been a lot of momentum and indeed outputs, certainly a lot of work is currently being done, as you would expect, in London. But from a European focus, obviously where our priorities are, we’ve seen significant interest in one of the models of that, which is the syndicate in a box, so we’ve seen significant interest. Of course, Munich Re was the first syndicate in a box initiative to come through that. So, that’s been good but obviously we’ve had a lot of interest around how all of this works and I think really for us the key objective for 2020 and beyond is to understand how the Lloyd’s Europe and Lloyd’s insurance company will play a role within that roll out of those pilots [and] developments which are currently being worked on in London.
IT: In your opinion, is the European risk landscape correlating with the UK risk environment, or are there any key differences there?
Cooper: There’s a lot of correlation, as you would expect, but there are some quite noticeable differences as well. One of the differences is the role of the carrier in relation to the policyholder in Europe. So, in the UK, we tend to see a more broker driven, broker-dominated role whereas in Europe, you may still have a broker, the engagement between the policyholder and the carrier is much more pronounced and much more visible, so that’s one noticeable trend. The second I would say is that certainly in the UK, we tend to see a prevalence for more monoline underwriting, more class expertise, whereas in Europe we see this multiline development and need for more cross-class experience from a single carrier. And an extension of that, probably a third area [or] point of difference is because of that monoline focus, you tend to see a greater specialism around innovation, complex risk in relation, in particular, to the UK market as opposed to the continental [market].
IT: What are the biggest risks that are on your radar at the moment?
Cooper: We’ve got through the Brexit uncertainty. Obviously, this year is still a transition year for us in many ways as we look to embed a lot of changes that we put in place last year and that’s not a risk per se, but it’s something that we’re overcoming. It’s how we face the cyber risk, for example, supply chain risk, aviation risk; a lot of the complex specialty risks that we’re seeing within Europe and how can Lloyd’s insurance company play a meaningful, material part in the development of that actual learning, through education, through innovation because through Brexit, we see a huge opportunity. We now have a vehicle in the heart of Europe, we have a strong branch network, multilingual teams that are able to get much closer to the clients, work with brokers, work with partners. For us, helping them work through their risk is really exciting for us. We’re hoping that will present new opportunities for us as well as challenges. We’re very much looking forward to that.
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