An insight into the impact of the pandemic upon the Insurance Industry with Fiona Temple, HR & Academy Director at Lloyd’s Market Association.  

Here at Avencia we are delighted to launch the first blog post in the ‘Avencia Consults’ series designed to bring you first-hand knowledge and expert advice from some of the most prevalent leaders within the Insurance industry.

 

Today we are joined by Fiona Temple from Lloyd’s Market Association (LMA) to discuss some of the impacts and changes she has seen as a result of the pandemic.

 

Some people are referring to Covid-19 as a 1 in 300-year CAT event for the Insurance industry. What do you think is meant by this and what are the repercussions?

The Covid-19 pandemic is significant although it is not unique; there was a similar outbreak in 1918 as well as more limited pandemics in recent memory (for example SARS in 2006 and Swine Flu in 2009).  Having said that the governmental response across the world to Covid-19 is unprecedented and the insured losses from this could rise even higher than in previous catastrophic events; such as 9/11 in 2001, or the combined impact of hurricanes Harvey, Irma and Maria in 2017.

Covid-19 has the potential to be a long tail event.  No one can truly predict the final insured loss. However, it will increase demand for insurance products to protect people against pandemic risks at a time when insurers are facing large Covid-19 related losses, and other challenges.  The industry will need to think carefully about remaining relevant in the ‘new normal’.

 

What changes are you seeing at the LMA in the way business is being conducted? Do you see this as a short-term reaction, or has it accelerated transformational change?

Like in many other sectors it has been necessary to conduct business remotely. We have seen an acceleration of transformational change across the Insurance industry, with many showing that they can still get their jobs done without having to be in an office.

Trust rather than output was a key factor as to why people couldn’t and haven’t worked from home.  Covid-19 has given people no other option than to trust one another to get their job done.  Leaders are staying true to their word in saying that people are their biggest assets and have seen employees be loyal if they are treated well and their employee engagement across most organisations, I would predict, has improved.

Who would have thought six months ago we would have been routinely engaging with colleagues and customers via ‘Teams’ calls?  Now, at the LMA nobody thinks twice about it and they are just part of daily life and the new ‘norm‘, impacting every aspect of the way we work and the relationships we have with people.

One thing for certain, Covid-19 will leave a legacy of sustainable transformational change within the Insurance industry and I expect there will be a significant impact on travel in the future and the resilience of our leaders, particularly as senior leaders, who are usually exhausted from plane hopping, have proven virtual meetings can be just as effective as face-to-face.  Not to mention the benefits of cost saving and environmental factors as well.

 

As part of a gradual push for digitalisation, in February Lloyd’s announced targets for all syndicates to write 80% of their risk using a recognised electronic placement system. What is it currently tracking at and what do you think the reasons for this are?

A recent LMA survey of Lloyd’s businesses indicated that around 90% of trading through April was completed using a recognised electronic placement system. The majority of this was achieved using PPL, the London market’s dominant electronic risk placing system. PPL had a record volume of trades since the beginning of lockdown; in the first week of April 5,600 risks were placed using PPL which was 2,000 higher than the previous weekly high. Towards the end of April, the number of unique users on the platform has risen 40% since the middle of March, with 102 broking firms placing business on the system in this period. All eyes are now on the 1st July renewals.

There is more PPL activity earlier and later in the day, in stark comparison to the usual spikes in activity around underwriting box hours.  People are adjusting to new and more flexible ways of working across the working week.

 

It’s evident that the way business is being conducted is changing, but what has this meant for the development of talent and what do you think the emerging talent themes will be over the next 6 to 18 months?

The London market must attract people with more analytical and digital skills. The world is becoming digitised and data will drive new product and service development and so there is a clear need for these skill sets.

The global economy is forever digitising and automating, and the business model of insurers will change. Mckinsey Research in 2020 (State of Property and Casualty Insurance) stated that a quarter of all insurance roles will be obsolete by automation in 2030, only 10 years from now, so the Insurance industry needs to look at how we can upskill or reskill our talent.

 

As some people return to the office how will this impact multi-generational workforce collaboration between baby boomers and late Gen Y and early Gen Z?

The baby boomers have adapted to working from home well and in some ways better than Gen Y and Gen Z.  They have soon realised that global meetings can be effectively run using technology and are enjoying the ability to spend more time with family, instead of travelling.  Gen Y and Gen Z have grown up with this technology and are missing the relationships and social interactions, with many worrying about how they are going to grow and improve their careers and feel it’s hard to establish their career from home.

The Insurance industry has always faced challenges when attracting new talent as many are unaware of how rewarding a career in Insurance can be, and the specialist and technical nature of the Lloyd’s market.  Those with the desired tech skills tend to want to work in cutting-edge sectors, rather than Insurance and as an industry we often look at the soft-landing point of graduate recruitment, but we need to be more radical.

So, whether it’s demystifying Insurance and creating an employee value proposition for the Industry or capturing the knowledge of experienced generations and upskilling new generations, more needs to be done to attract and develop talent.

 

What skills do you think the market will need to recruit in order to meet those challenges?

Regardless of whether the pandemic had occurred or not, there is a clear need for data and automation skills within the Insurance industry.  These will drive and evolve organisational design, as those with a digital skill set will seek greater autonomy in their role, thrive in flatter structures and expect salary increases which are not necessarily linked to promotion.  These are questions which the London market and Speciality Insurance market has not yet experienced.

 

How does the work that you and the LMA do help support businesses to meet talent challenges?

The LMA Academy’s purpose is to enable the success of our members by creating a knowledge centre to deliver bespoke educational offerings.  We partner with our members and industry experts to provide support and advice to bring the market together with insightful voices to impact change and develop our market’s people. Members have access to an unrivalled network of industry experts to actively enhance talent pools at all career levels through the offering of training in core technical skills.

The LMA Academy’s mission is to provide technical learning solutions which supports skills and knowledge development amongst our members’ employees, and we have been looking at the different aspects of the market to see how we can support and drive them to a better place.

 

Fiona will be talking through the return to work and key considerations for HR in the Insurance industry in the next Avencia Consults blog post, follow us on LinkedIn to find out more.