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Innovation has been at the beating heart of Lloyd’s of London for more than 325 years. Like many great innovators, this market started with humble beginnings – from a London coffee house in 1668. Three centuries later, Lloyd’s has become the world’s leading market for specialist insurance.
The Lloyd’s innovation journey is quite remarkable. After starting as a marine specialist, the market quickly expanded. In 1904, Lloyd’s underwriters issued the first ever motor policy, referring to cars affectionally as “ships on land,” noted current chief financial officer John Parry at a Fitch Ratings Insurance Roadshow in London. By 1911, the first ever aviation insurance policy was written by Lloyd’s, and, just 50 years later, it placed its first space satellite insurance policy.
And that’s just travel innovation! Lloyd’s has insured many fascinating things over the years, including Silent film comedian Ben Turpin’s crossed-eyes, Ugly Betty star America Ferrera’s smile, various priceless art and jewelry items – and even Richard Branson’s Virgin Galactic private spaceship.
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“Innovation has been at the heart of Lloyd’s since it started – and we’re always keen to keep that going,” said Parry. “We’re always scanning the horizon to see what risks are out there and how significant they are. Some risks translate into capital and some don’t – it all comes down to the risk appetite.
“[It’s important to distinguish] whether a risk is part of our sustainability, reputation or market brand, or whether it’s a capital move. If it has a capital focus, it’s important to quantify it and put something in the hands of our underwriters to help them with offering new products at the right price, to continue that throughput of business and keep Lloyd’s competitive.”
The market is well versed in new technologies and artificial intelligence to enable its underwriters to place innovative policies and cover increasingly specialized risks. Cyber is one such growing product line at Lloyd’s, in line with ever-increasing demands for market capacity worldwide.
Lloyd’s recently released a report on Cloud failure scenarios, which stated US businesses could stand to lose between US$5.3 billion and US$19 billion if one of the country’s major cloud computing providers goes down for just three to six days. This type of thought leadership helps to “crystallize cyber risk,” and educate underwriters, which is all part of the Lloyd’s innovation journey.
“Sometimes, [innovation] is thought leadership,” Parry commented. “We want to translate [thought leadership] into product, and into something the market can use to compete as a business going forward.”
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