Insuring for the future?

Sep 16th 2004

From The Economist print edition

Lloyd's is trying to make its business practices as sleek as its building. But will that be at the expense of the characteristics that make the market so distinctive?

“IF YOU had to invent an insurance market, you'd never invent Lloyd's,” it is often said of the 316-year-old London-based institution. Lloyd's is most famous for almost going bust in the 1990s at the expense of the individual “names” who used to provide its capital. Lately, however, it is showing signs of having made a remarkable recovery. It reported profits of £1.9 billion ($3.1 billion) for 2003, more than double the previous year. And its reputation is riding high. Not only did it willingly pay huge claims after September 11th, but also it expects to have no trouble riding out the succession of hurricane-related claims currently battering the insurance market. Its final payout for hurricane Charley, for instance, was a modest £300m or so, hardly enough to dent a market that has annual underwriting capacity of £15 billion, almost half of which is directed to the reinsurance business.

Lloyd's new-found health is galvanising its bosses, who think the market can do even better if only it will shed some of its quirkier characteristics and embrace modern technology and business practices. Nick Prettejohn, chief executive since 1999, talks of changing the behaviour of the whole enterprise: “We're trying to make up for an awful lot of lost time..............

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