Putting a face to Lloyd’s

The “best known, least understood” brand in financial services. That is how Lloyd’s of London is described by Caroline Wagstaff, head of marketing for the 300-year-old insurance market. Wagstaff, along with Lloyd’s managing director for North America, Julian James, is hoping to promote a new image of the company with brokers, regulators and the public. “We don’t want this to be a faceless organization, sitting in London,” she says. “It’s a very deliberate campaign… to articulate what the new Lloyd’s is all about.” comments James.

The recent announcement that Lloyd’s, a self-regulating market under the Lloyd’s Act, had chosen to submit to the supervision of the U.K.’s Financial Services Authority was based, in part, on the desire to improve the company’s public image. “It’s always easier to explain to the outside world that you’re regulated by somebody else rather than yourself,” says James. While Lloyd’s own regulatory staff of 130 will continue the day-to-day supervision of the market, the company is “moving towards a degree of supervision by the FSA”. James says the move makes sense given the British, in fact international, move to harmonize regulations across financial sectors.

Canadian connection

Promoting the new, tighter controls under which Lloyd’s will operate is particularly important in Canada, says James. This is because Canada represents Lloyd’s second-largest international market, with $655 million in premiums written last year, a 26% increase over 1998. The lack of success for companies trying to enter the specialty risk business in Canada has put the company in a good position for growth here, Wagstaff notes. And James says the desire of underwriters to offer reinsurance to Canadian insurers, as well as the steadfast network of 680 brokers who “have stayed with [Lloyd’s] through good times and bad times”, indicate the company has a strong, “business as usual” future here.

Lloyd’s will also continue its pursuit of “names” from whom it is trying to recover losses of $18.63 billion worldwide. In Canada, Lloyd’s won its bid earlier this year to pursue several names, a process Wagstaff says the company “will follow to its conclusion”. It is “extremely unfair” to the 95% of members who accepted the terms of Lloyd’s 1996 settlement offer following huge losses resulting from natural and man-made disasters, including U.S. asbestosis claims. “In all cases, the door has been slammed in [non-paying names’] faces”, notes Wagstaff of the court battles. She adds that the company is willing to discuss terms with names who cannot pay their share of the settlement, but will continue to pursue all outstanding cases.

Corporate Capacity

Recent press reports predicting the withdrawal of corporate capital from Lloyd’s are another thorn in the market’s side, and something James takes exception to. “If you look at the number of new corporate entrants and what corporate capacity is doing, they are virtually all trying to get a stake in Lloyd’s market, and in many cases increase their participation. These are not the acts of people trying to flee the market.” The predictions were based on recent corporate underwriting losses and the exit of several corporate members, including Duncanson & Holt and UNUMProvident. Wagstaff points out that some of the most publicized exits were “entirely driven by third-party events”, including decisions to exit specific markets. Capacity has been steady at about CDN$23 billion, she says, “how that’s split between private and corporate capital is of considerably less interest to everybody.”

Lloyds.com

The company’s sights for the future are set largely on the Internet. “We still have a clubby, British institution, populated by men in pin-striped suits atmosphere” in the public’s mind, Wagstaff admits. But with the launch of Lloyds.com, with 15 online trading sites offering a variety of covers from art to pets, the market hopes to transform its image and expand its reach. In January, 2001, Lloyd’s will offer Canadian brokers the chance to deal one-on-one with Lloyd’s underwriters, rather than through London brokers. “Despite being seen as crusty and a bit old-fashioned, we’re really pretty ‘dot-comish’,” says Wagstaff.

As the old giant of the insurance world hits the information superhighway, the hope is to put a new face on an old name. Notes Wagstaff, “we can’t just sit on our laurels and say ‘everyone knows who we are’ “.