Interview - Keith Stern: Raising the regional profile of Lloyd's

With one eye firmly fixed on global expansion, the Lloyd’s market has grown its international reach beyond its iconic London home across five continents to almost 
30 countries.

Lloyd’s thirst for overseas expansion is far from quenched with Mexico, Turkey, Russia and India all plotted on the map of the market’s ambition.

While many of his counterparts reside in far-flung outposts acting as ambassadors for Lloyd’s growing empire, Keith Stern, regional manager of UK and Ireland, is the man tasked with holding the fort at home.

The appointment of Mr Stern in July last year marked his return to London after a decade-long stint in Australia including time as head of the market’s Asia Pacific operations. With 10 years of international experience under his belt, Mr Stern is keen to continue to build on the progress he has made in his first year back.

Tasked with refreshing the Lloyd’s approach domestically, Mr Stern explains that relationship building was crucial to the initial 12-month period. While Lloyd’s has been chasing opportunities overseas, the chance to capitalise on regional business in the UK has not been taken.

Raising the profile
“The broad brief I have is to try and raise our profile in the UK and develop opportunities for our Lloyd’s underwriters and brokers,” he says. “In particular, that translates into looking for opportunities with regional brokers in the UK, encouraging them to engage more with the Lloyd’s market and 
vice versa.”

Mr Stern admits: “The ironic situation with the UK, compared to how we invest overseas, is that a lot has been taken for granted. We have a high profile here. However, it is more about what we weren’t doing outside the City in comparison to what we were doing in other countries.

“What I have brought to the UK is not groundbreaking but I am trying to introduce some of the work I was undertaking in Australia to our development plan here — but the bottom line is that the UK, outside of the City, 
was overlooked.”

This has meant a number of firsts for the Lloyd’s market in the UK in the past few months. Mr Stern took the Lloyd’s roadshow to Northern Ireland for the first time in May this year and exhibited at the British Insurance Brokers’ Association conference during the same month for the first time in its history.

“We need to explain exactly how a regional broker, in Belfast for instance, can place business in the Lloyd’s market,” Mr Stern explains. “We wanted our guys from London to really make it feel it was possible. For some it was brand new and we have had great feedback. That was a test for us; as far back as anyone can remember, we hadn’t done anything like that in Northern Ireland before.

“We had also never exhibited at Biba, which is unbelievable really, but we had a Lloyd’s stand this year and it was imperative that we had underwriters on it. We had great support from half a dozen syndicates.”

According to Mr Stern, a mystique surrounds Lloyd’s across many of the UK regions and the debunking of that myth is vital to improving engagement.

“That is one of my main objectives and something I am always thinking about,” he says. “There is some ambiguity and a misconception that Lloyd’s is only for the big end of town and the hard-to-place business. That is what we are renowned for, we are a specialist business but we are also here to write SMEs, small commercial and some niche personal lines business.

“When we turn up to a conference like Biba that is a message we want to get across. Many of the regional brokers that attend are looking for cover for their clients, which may be small businesses.”

But these perceptions are arguably just as entrenched within Lloyd’s itself, resulting in a failure to gain domestic business outside of the capital. Distracted by the glamour of overseas territories, Lloyd’s market players have found regional work a lot 
less appealing.

“I guess, as underwriters, our market looks for a global spread of risk,” Mr Stern admits. “That is the nature of the business. Maybe it is less glamorous to stage an event in Leeds and Manchester than some of the international stuff we do.

“It is driven by profit margins, commerciality and where underwriters and Lloyd’s brokers see opportunities; sometimes it is easier for an underwriter or broker to look at a new market like China, Brazil, Russia, Turkey or Mexico.”

Taking on the big guns
To gain traction, Mr Stern has thrown down the gauntlet to the market, challenging its players to take on large domestic insurers by making Lloyd’s more attractive to the placement of UK business.

“That is one of the reasons I took on the role here,” Mr Stern explains. “It is a challenge to compete more actively with the domestic insurance market. Outside the City of London especially, things have been dominated by the companies market. We only have 6% to 7% of the commercial lines market in the UK. If we had done more in the past we would now have a stronger position.

“It is an odd statistic because it underlines that we don’t have market penetration in an area you would expect us to. The UK is our second largest market and penetration is poor. We are missing some opportunities with regional brokers and managing general agents.”

He adds: “So now we are starting with a clean slate. In developing markets the opportunities are seen to be fruitful and strong on growth which might have been missing from the UK recently. In some ways it might be easier to galvanise underwriter support when we want to go into a new country rather than when we want them to develop existing lines of business in a mature market in the UK.”

Having committed to a fresh start with regional brokers, Mr Stern is keen to build on the work achieved in the first 12 months, now that he is in his second year in the role. As well as continuing with the regional roadshows, invitations have been sent to brokers to come to visit Lloyd’s — an initiative that the market has used to great effect overseas but failed to implement in the UK.

“This programme is something we have done for our US brokers for years,” Mr Stern says. “Ironically we haven’t had this set-up for regional brokers outside of London. It is a programme and one we want to run throughout the year. If it goes well we will run it again.

“So it’s not just about getting our underwriters and brokers out to regional UK but also throwing our doors open and inviting brokers to visit Lloyd’s, understand Lloyd’s better and see Lloyd’s in action.”

It is also part of the year two plan to interact more effectively with UK coverholders, bring them into the Lloyd’s fold both in Europe and overseas.

Mr Stern adds: “In the next 12 months we want to invite UK coverholders to become more involved in Lloyd’s affairs and invite them to be part of our European coverholder conference for the first time. We need to make them feel they are genuinely part of the wider Lloyd’s community and that, just because they are not based here, they are not any less important.”

Heart of the market
However, it is clear that regional brokers are intended to be at the heart of the Lloyd’s market in the UK in the years to come. While others at Lloyd’s are looking to Istanbul, Moscow and Bangalore, Mr Stern is plotting his next moves in Ipswich, Manchester and Birmingham.

He says: “We are conducting some research within the department at the moment which we hope will help us segment and understand the UK market better.

“What that will reveal to us is whether there is a niche product, or region, where our underwriters can write some profitable business and we can act as a marriage broker. We are here to try and encourage those regional brokers and underwriters to come together.”

He concludes: “There are always new regions and new products to continue to develop. I would really like to see the broker networks and the cluster groups to think of Lloyd’s before some of our competitors in the domestic market.

“We are clearly not there yet, there are a number of factors that come into play. It is not necessarily something that 
will happen in the next one or two years — it will take longer than that.”