Speaking on an Insurance Insider panel discussing the future of the London market, Balcombe said: “The challenge for the industry is really bringing through the next generation of competence and capability. We really need to start thinking about what talent we need for the short to medium term, not 2050, 2060 or 2070.”
He said the London market should think about how it could “get its arms around the talent” that has not yet made its way into the industry.
Sean McGovern, CEO for the UK and Lloyd’s at Axa XL, concurred, saying the industry should focus less on “recycling” existing talent, which was a “constant theme”.
“We need to open up the pipeline,” he said.
On the subject of catastrophe risk, Beazley CEO Adrian Cox said: “Climate change has thrown a big spanner into the cat playbook.”
McGovern noted that the industry was now facing its fifth year of above-average cat activity.
“The question is,” he added, “is this increase in frequency and severity a short-term trend or a long-term trend? There is a tremendous amount of ‘unknown unknowns’.”
McGovern recently claimed the ESG drive was the “biggest opportunity for the industry we’ve seen for a generation”, but he added that it would also prove a huge test for reinsurers.
During the panel, he said the biggest question “everyone is asking right now is, what is the price adequacy for cat?”
McGovern said Axa XL was retrenching from cat in certain instances and that reinsurers were following suit due to the uncertainty surrounding it.
Dominick Hoare, group CUO at Munich Re Syndicate, said his company would be buying more reinsurance as a result of that uncertainty – “and that says it all”.
Cox added that, although the London market “will get things wrong” going forward, “the tools are there” to help the industry do what it needs to.
Andy Bragoli, CEO at Howden Insurance Brokers, believes that double-digit rate rises for cat look likely going forward.
Elke Vagenende, global head of multinational at AIG, said insurers needed to provide sustainable solutions for threats facing the industry, including inflation and cyber.
But she added that the industry must price realistically on all levels so “we can actually provide solutions” to these challenges.
McGovern said the world was a very “uncertain place”, which he noted was the “business of insurance”, whose value was “continuing to be proven”.
Hoare added that he was very optimistic about the London market.
“We turned our hand to problems historically, and we will do it again,” he said, citing the “huge” expertise and intellect of the market.
On the topic of innovation, Balcombe argued that the industry lacked a marquee brand that had "embraced digitalisation” in a way that improved cost and efficiency.
Even if the industry is seen as being slow to embrace data and technology, he doesn’t see the potential entry of tech brands such as Google or Amazon into the insurance space as a threat.
He said he considered this instead as an opportunity for the industry to partner with these companies and “realise our own ambitions for digital innovation”.
