Invest in generation Y, urges Beale

Understanding the next generation and a rapidly evolving digital environment are vital to achieving market modernisation, Lloyd’s CEO Inga Beale said at a KPMG briefing in Monte Carlo titled Transforming Insurance.

In terms of modernisation, she said, the focus should be on digital infrastructure and making it as cutting-edge as possible. She also referenced the findings of a survey of global insurers by KPMG, which examined their relationship with technology.

“Understanding tomorrow’s customers in terms of what they are demanding and how companies will meet their needs is crucial,” Beale said. “KPMG’s research found that the biggest barriers to change are often human, and I couldn’t agree more.

“We’ve lagged behind some of the sectors in financial services, and one of the reasons is because we don’t have enough people with the right skills to look into these softer types of data, which will grant us much better insight.”

However, she emphasised that technology is about facilitating relationships, not replacing them.

The best talent is very focused on the digital environment but, for many insurers, this remains a major challenge.

While 69 percent of KPMG’s survey respondents had a digital strategy beyond their website, only 37 percent had aligned their digital initiatives with their strategic objectives.

Beale revealed that the average age of a US insurance agent is 59. A quarter of the industry’s workforce is expected to have retired by 2018.

“We need to start investing in some talent to get the new cohort of leaders to inherit the industry. The best place to look is generation Y, people born between 1982 and 1993, and we must tailor to their needs,” said Beale.

“An interesting thing about generation Y is that they’re a more socially conscious bunch than previous generations, so the core of what we do, which has intrinsic social value, should appeal to them.”

Beale noted, however, that it is not good enough just to think about generation Y in the western world, as Lloyd’s attempts to go into some emerging, uninsured markets like Latin America, Asia and Africa.

“To achieve a presence there, we need to recruit with true diversity, because we need our people to reflect our customers,” she said.

Stumbling blocks

Beale noted two major blockages preventing companies from moving forward with modernisation: challenging underwriting conditions, and the battle for the right type of talent.

“Strong diversity on executive boards may not solve the pressures that we’re seeing right now but it’s very much a tool we can use for the future in terms of harnessing this talent,” Beale concluded.

“We need to start investing now for our digital future, which does require a conscious effort to retain the best talent.”

In a separate interview with Monte Carlo Today, John Nelson, the chairman of Lloyd’s, said that the challenge facing the market as it develops its global reach was striking the right balance between its historical innovation as a market and the requirement for prudential underwriting.

“We must be careful not to lose our discipline as a market but the signs are good that we are striking the right balance,” Nelson said. “It is a challenge to remain as innovate as we have been historically but true innovation really stems from the skills and expertise we have in the market.”

He added that there was no doubt that more needed to be done on this front by the industry as a whole.

“If you look at the risks clients are facing in the world now and the list of products the industry offers, there is a gap and it is growing,” he said. “But we have already seen the Lloyd’s market at the forefront of some of the most cutting-edge products, like supply chain risk and cyber, and I believe that dynamic will continue.”