LLOYD’S of London could do more to cut transaction costs for member syndicates, its chairman admitted yesterday, as he warned the insurance industry to prepare itself for an astonishing period of transformation.
“We cannot be complacent,” John Nelson told City A.M. “There is work to be done. In other industries they – to be frank – pay more attention to costs than the insurance industry has done.”
Nelson said Lloyd’s is well placed to deal with the expected boom in demand for insurance from emerging markets. However, the former banker warned that this is prompting investors with big pockets – but limited understanding of the risks involved – to enter the sector.
“The capital is arriving before the demand and it’s anxious to get into the markets. We can’t separate the capital from risk transfer – we need knowledgeable capital that understands the risks.”
Yesterday the marketplace, which comprises dozens of individual insurance syndicates, announced that market-wide profits fell to £1.38bn from £1.53bn in the first half of 2013, largely due to weak investment returns.
Nelson also said he hoped to appoint a new chief executive to replace the outgoing Richard Ward “by the end of the year”
And he did not completely rule out the prospect of the marketplace leaving its iconic Grade 1 listed building in the City: “We’ve no plans to move at the moment but we’ve been here 26 years – and that’s the longest we’ve ever been in a building.”