Featuring Lord Peter Levene, Chairman, Lloyd’s
Presented in partnership with Mihaylo College of Business and Economics, Center for Insurance Studies and the Insurance Industry Charitable Foundation
December 2, 2010 -
Notes from Mr. Levene’s Keynote Address:
(I do not guarantee 100% accurate, these are my personal notes):
The US Market is $12.5 Billion, 40% of Lloyd’s worldwide business.
California is the 2nd largest market for Lloyd’s in the US.
Lloyd’s did not suffer from the financial crisis, and had record profits in 2009. The organization maintains an Excellent financial strength rating.
Insurance Companies are stable. Even AIG, who was bailed out during the financial crisis, was stable in their insurance divisions. The financial division created the need for a bailout.
Insurance companies must have profits in order to be able to pay claims.
Lloyd’s has a 300 year history of innovation in insurance products, such as:
1895 Property for Earthquake
Lloyd’s has insured:
Fred Astaire’s Legs
Ugly Betty’s Smile
Steelers Football Player Troy Polamalu’s Hair
In 1906 The San Francisco Earthquake occurred. The local Lloyd’s agent wired London and asked what he should do. The response from Lloyd’s was exactly this, “Pay all of our policyholders all claims, irrespective of the terms of the policy.” $50 million was paid.
Lloyd’s has expert underwriters who can price the most complicated risks.
Insurance has played a very positive role in history, by requiring some risk reduction measures of their clients as follows:
Small pox coverage – required vaccination of clients, which save many lives.
Fire Insurance – Required preventative chimney cleaning.
Motorcycle Insurance – Required Helmets be work by riders.
For businesses - risk reduction and avoidance takes, foresight, planning, creativity and funding.
Lloyd’s works to understand the future needs of clients – i.e. cyber risks.
Company managers need to consider:
Future Energy and Water Shortages
Their amount of exposure to this risk
How to mitigate losses
Lloyd’s is expanding in China - First in reinsurance, and now as direct insurer.
One of Lloyd’s goals is to maximize profits, not revenue. They look at the bottom line, not the top line.
Lloyd’s has a department that works on Realistic Disaster Scenarios. They did not forecast the 911 attack; however, they did have a forecast for two 747 jets colliding over Manhattan, and their numbers were close the the monetary loss of the 911 attack.