Insight and Intelligence on the London & International Insurance Markets

12 December 2017

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Top Dog

Mark Geoghegan 15 November 2016

Lloyd's managing agents are a fiercely independent bunch.

Granted, the days when an active underwriter was only accountable "to his Names and his wife - in that order" are long gone, but the freedom of spirit among those sitting in the key seats inside Number One Lime Street remains a formidable force to be reckoned with.

If a Lloyd's managing agency chief executive were a dog it would have to be a bulldog - strong, loyal, fearless and quintessentially British.

For this reason, if you had polled a representative sample of Lloyd's underwriters at any point in the last 325 years and asked them if they wished to be left alone to govern their own affairs or not, you would have found an absolute majority in favour of splendid autonomous isolation every time.

But following the scandals of the 1970s, the subsequent Fisher report and the Lloyd's Act of 1982, the market has been brought reluctantly to heel by the Establishment.

And after the near-death experiences of R&R and the disastrously soft market of 1999-2001, the advent of the FSA, and now the PRA and FCA, have cemented and solidified the new reality.

Lloyd's may sometimes feel like it is still an independent sovereign nation, but at best it is an autonomous region within the Republic of the Bank of England and, ultimately by extension, Number 11 Downing Street.

The PRA holds a chain that extends across town and is firmly attached to the neck of the chairman of Lloyd's.

It can pull hard on that chain whenever it wants, and while the chairman may pull in the opposite direction, he or she must eventually behave or be choked.

Just knowing the leash is there is usually enough to promote the desired behaviour.

Despite the maximum security environment, the past 15 years have seen the powers that be impose a chairman from the centre onto the market.

In canine terms, we've had nice family-friendly Labradors running the show. They are low maintenance from the Establishment's point of view and are a safe option.

No one ever got fired for hiring massively competent and experienced outsiders to oversee Lloyd's -such candidates rarely savage the postman or bite visiting children.

But since the levers of control are firmly in place, and it is eminently clear who is the ultimate master, why then not allow a native breed to be top dog?

The bulldog may not be the easiest animal to train, but safely on a lead there is a very limited amount of harm that it can do. And what the bulldog brings with it is all the right instincts. It knows what to chase, when to bark and when to bite.

For the owner this means there will be more pulling on the lead, but the resulting tension is valuable as it transmits the right information quickly along the chain of command.

And in contrast to times past, there are some exceptionally strong insurance industry candidates currently available with genuine global experience and all the required political connections.

Extreme cyclical and secular challenges face Lloyd's wherever one cares to look. The bulldogs are straining and barking loud. They know exactly what they want to do.

Now is definitely the time to unleash the bulldog spirit and give the market what it wants.

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This article was published as part of issue November 2016/3

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