Lloyd’s of London CEO Inga Beale sits down with Jonathan Swift to talk about Brexit, diversity and the need to modernise the market
If you needed any further evidence of the tensions in post-Brexit Britain, catching a lift to the 12th floor at the iconic Lloyd’s building to interview CEO Inga Beale provides the perfect example during the upward trajectory.
Overhearing a conversation in which one of the people in the crowded glass elevator called those who voted to leave the European Union “moronic”, another pipes up: “I voted out; and what really gets on my goat is people like you who think I am a moron just because of my views.”
After a toing and froing about what the UK might or might not have lost in the new world, the tension is diffused when the Brexit supporter leaves, a floor later than he planned in the heat of discussion.
Picking up the theme of this thread with Beale 15 minutes later, she explains how she felt on waking up on 24 June to learn the UK electorate had voted to sever ties with the EU.
“I went to bed [before the result came in] because I thought if [the vote] went the wrong way as far as Lloyd’s perceived it, I needed to be fresh as it would be all hands to the pump the next morning.
“So I knew I had to get up early, and yes I was shocked when I saw the result at 5:00am because I had had a business dinner the night before and we were all fairly positive when we left [that Remain would win].”
The Lloyd's executive had been vocal in the run up to the vote, with former chief risk officer Sean McGovern saying leaving the EU would create uncertainty for Lloyd's, while chairman John Nelson claimed the idea that the country could still have favourable trading terms with the EU after a Brexit was "fantasy".
Asked whether Lloyd's had played into the hands of the Brexit camp's accusations of 'scaremongering', Beale insists that it had been very focused in its messaging.
"Because none of us are politicians, [the Lloyd's executive] was very conscious that we did not want to get into the political space [in terms of the wider debate]. We kept to the business facts and did not talk about jobs.
"There was one International Underwriting Association comment that came out [about potential job losses] but that was not our story. Our narrative was about how it threatened the [European] business we write from London, because we potentially lose [passporting] rights. So [our arguments] were all about the business rationale."
to best describe her
Since the vote, Lloyd's has publicly forecast £800m of cross-border business could be affected by the UK's withdrawal from the single market.
So, in order to safeguard as much of it as possible, the market has set up a dedicated working group to consider its next steps, and Beale admits one possibility could be establishing a ‘mini Lloyd’s’ operation like it has in Singapore, and, while refusing to comment on speculation, Germany – as the largest European insurance market, and specifically Frankfurt – could be a possible destination if this avenue was followed.
“We are looking at all options at the moment but have not reached a decision about any of them. So we still hope that the government will do something [to maintain the trading status quo]. But we are also doing work looking at our individual licences across Europe; and another considering whether there is something [we could set up] in an EU country that would allow us to [continue] to passport cross-border business.”
Desert Island Discs
Sandwiched between actor Tom Hanks on 8 May and Motown Record founder Berry Gordy a fortnight later, Inga Beale was cast adrift on Radio Four Desert Island Discs.
Reflecting on the broadcast she comments: "[I have had] lots of positive feedback from people I have never met; not one negative comment."
Quizzed on whether it was difficult to narrow down her music selection, she adds the task was made a lot simpler by the show's template: "It is quite structured as they like to do the story of your life and force you to choose a piece of music from those various stages that resonate with events."
Inga's Desert Island selection
Aretha Franklin - Respect
Louis Jordan - There Ain't Nobody Here But Us Chickens
Edvard Grieg - Morning Mood from Peer Gynt
Bob Marley - Could You Be Loved
The Waterboys - A Man Is In Love
Miriam Makeba - Pata Pata
Gabriella Cilmi - Sweet About Me
Post sat down with Beale days after new Prime Minister Theresa May announced her cabinet; a body that is notable for the presence of eurosceptics Liam Fox and Boris Johnson in the important roles of Secretary of State for International Trade and Foreign Secretary respectively.
2014 to Now
CEO, Lloyd’s of London and external board member, Financial Services Trade and Investment Board
2012 to 2013
2009 to 2011
Global chief underwriting officer, Zurich Insurance
2008 to 2009
Head of mergers and acquisitions, organisational transformation and internal consulting, Zurich Insurance
2006 to 2007
Chief executive, Converium
1992 to 2006
Various roles at GE Insurance Solutions/GE Frankona Re
1982 to 1992
Underwriter, Prudential Assurance
As to how these appointments might impact the future of UK’s passporting rights, Beale diplomatically responds: “It is a bit early to digest and work out what is going to happen. But we are working with other financial institutions through City UK to try and get a common voice for firms, so that is how we are trying to progress things, regardless of who is in government.”
Beale was unveiled as the new Lloyd's CEO at the tail end of 2013, following weeks of speculation that the market was going to unveil its first female head; filling the shoes of Richard Ward and taking up the mantle of the Vision 2025 strategy that was first unveiled a year earlier to an equal amount of fanfare.
So, could Brexit impact the mandate set out in the document? Beale responds: "We are sticking very much to the priorities that we have got with Vision 2025. We have a huge team that handles regulatory affairs, and it is true that they are putting more effort into the EU countries than they would have done [before the vote]. But we have our Malaysia licence application [in play] and we are still setting up in India – none of that work is stopping."
As to how she feels picking up something that was effectively devised by a different regime, she remains positive about its objectives.
“A long time before I knew I was getting this job, there was a piece published in my name [as Canopius CEO] supporting it. So I fundamentally believed in it then. Little did I know I would be inheriting it and running it [within two years]. But I felt then [in 2012] that we needed to modernise, be local when required or appropriate, and think about innovation and talent. And all those fundamentals are there [in Vision 2025].”
Innovation – or lack of it – is a stick that is often used by Lloyd’s critics to highlight how it is losing touch with technological developments elsewhere. But for a market that has grown up as the go-to place for esoteric risks, maybe these doom-mongers have been too quick to call Lloyd’s out.
Last month the first standalone terrorism risk was bound on the London Market's electronic placing platform [within the first hour of trading on 11th July], with further lines to be added as part of the Target Operating Model programme.
Whether the Lloyd's market is ready to fully embrace the insurtech agenda that is very much the buzz down in nearby Hoxton and Shoreditch remains to be seen, but it is evident progress is being made.
“[In terms of TOM] it has got to be about selling a story, because people can be threatened by change, so what we are trying to do is illustrate the non-threatening value add that [the technology] brings end clients,” Beale comments.
“One of the things that we would love to do is get to a stage where a client can track something being quoted or a claim being paid, just like you do with a package being delivered [to your home]. That is what we have to aim for and no one can argue that is not the way we need to go.”
Beale is adamant that these objectives will be delivered before 2025, and is also quick to draw comparisons with other parts of the insurance market to underline that far from being left behind, Lloyd’s has a great opportunity to take a leading position.
“When we did some benchmarking when we launched TOM, [we found that] unless you are in the personal lines or very small commercial spaces, nobody seems to be much better [than Lloyd’s] and that was interesting.
"And in the London Matters report that Boston Consulting Group did, one of its conclusions was that we could steal a march here on the competitors because nobody is very good, not in the high end complex risk insurance market."
Inga Beale on...
Reverse mentoring: I have a reverse mentor – someone who has just started their working life. They are mentoring me to try and keep me young and understand what clicks with their generation; because when you are running a business, you have to make sure you appeal to people of all ages.
The benefits of agile working: We still have fixed desks here [in Lloyd’s], but [my reverse mentor] asked ‘why do I have to come in every day, sit at the same place, and listen to the same people? It is so boring. I want to have the choice to speak to new people’. [This mentor] has just started work, and their thinking is so different. And it is these little things that we have to listen to, and adapt the workplace to reflect.
What drives her creativity: I am concerned [having fixed desks] limits creativity. Because I know when I come into the office I [tend to] do the same thing every day; and where is the creativity going to come from if that is all you do? You just get used to a routine. I find when I [get out of that routine], travel and go to different places, that is when I start to have more creative ideas.
Having an executive that is made up by a majority (six to three) of women: No one has said anything to me. I wonder how many would question [the makeup] if it was all men. [People in the market] could be talking about it, but no one has said anything to me.
The steps Lloyd’s is making to be more accessible for disabled people: [In terms of disability] last year [at Dive In] we had a whole day on disability, and not just physical, but the mental side too – and we will have sessions on those subjects again this year. As far as [disabled access to] One Lime Street, we are making improvements, but because it is a Grade One listed building we have to agree with [architect] Richard Rogers [to make changes]. But we are working on it and we will be making several changes to make it more accessible.
Changing talent pool
To get ahead, one thing Beale is very conscious of is that Lloyd’s will need to change its talent pool, which means attracting people who might be used to working in environments where jeans and trainers are accepted rather than pinstripe suits and ties.
“This is why our talent focus [as part of Vision 2025] is so important. We need to cut out the old ideas, try to challenge the unconscious bias and create an environment that is welcoming for people who are a bit different.
“The underwriting floor is a challenge, but certainly the dress code has relaxed in most places around the Lloyd’s building; and you need to do that because the new generation of tech savvy people who are looking for roles are thinking ‘why would I want to work here?’ So it is important to make sure we have the right culture and everything is flexible.”
Given her identity as not only a prominent business woman, but also a bisexual, Beale has been described as the ‘poster girl for diversity’. This is something she is evidently passionate about.
This September, Inclusion @ Lloyd's will hold its second Dive In festival to promote diversity, and although she cannot yet attribute any progress or otherwise to the event itself [in terms of statistical evidence], she is certain things are changing for the better.
“We have not got the data yet to see if people have got more diverse workforces, but I can tell you just from the conversations that I hear, and the look and feel as you walk through the underwriting room, that this place is a lot different now.
"[When I returned to London as Canopius CEO in 2012] it felt very similar to when I left 12 years earlier. But now it feels very vibrant. And it is not just what we are doing in the insurance sector [that is shaking things up] but the City as a whole. It feels far less like a financial district.
"So for instance Richard Rogers [the architect of the Lloyd's building] has moved into the Cheesegrater [The Leadenhall Building] from Chelsea. They don't wear suits and ties, they are a different type of individual; the whole place feels more diverse."
The desired end result of the modernisation and talent drives being undertaken by Lloyd’s is to keep London at the forefront of the global insurance market; and to buck the current trend whereby the London market gross written premium remains static on around £60bn – while the global total grows.
"It is important that we adapt the Lloyd's model so that if customers want to buy insurance locally using local capacity they can. And Lloyd's can provide that through our traditional cover holder/delegated authority model. So, for instance, in Singapore – which is our second largest location outside London in terms of underwriter concentration – we are having great success.
“Our aim is to track GDP growth in emerging markets, so we are currently ahead in China. But when you start from a small base – percentage wise – it is easy to do that.”
Quizzed on whether expense could be counting against Lloyd’s competitiveness, Beale insists its administration costs, controlled centrally, are on par or lower than other markets. It’s the distribution chain – and particularly the commission charged – that remains an issue.
“The more we do on modernisation, the greater the reduction in the cost of the distribution should be,” she continues. “But it is not something we can manage. We can only try and facilitate taking costs out of the market, which is what we are doing with the automated premium and claims processing, for example.”
To conclude, Beale notes that running Lloyd’s is a lot more like running a company than she expected in terms of the fact she has a vision, strategy and targets to deliver on.
The main difference – as recently shown by her appearance on Desert Island Discs – is that she is seen much more of a figurehead than her contemporaries who run the businesses that make up Lloyd's.
“That is the piece that makes up the 20% difference between this role and that of a commercial CEO,” Beale concludes. “Because we are seen as neutral, I am asked to participate in a lot more things than I would if I was a CEO running a large insurer. I get to speak on behalf of the [entire] London market, so it is different in that perspective”
And while that neutrality might have been tested by the EU vote, few would disagree with the need to future proof Lloyd’s. And whatever happens with passporting rights, in Beale the market might have found the ideal candidate – with more steel than the futuristic One Lime Street building itself – to unite it on the modernisation path.
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