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Michael Papworth, head of Asia and property & casualty at Miller
12 September 2018 Insurance

Lloyd’s ‘has overreacted to 2017 losses’: Papworth

The reinsurance market must accept that buyers won’t pay a higher price and instead focus on increasing efficiencies in how business is transacted, Michael Papworth, head of Asia and property & casualty at Miller, told Monte Carlo Today.

He said this is especially the case in the Lloyd’s market, which is largely approaching this in the wrong way.

“London to an extent is tipping itself over a cliff,” said Papworth. “It was badly hit by the losses last year—disproportionately to the rest of the world. However, they’ve overreacted with the correction.”

Papworth noted that P&C in the Lloyd’s market had poor results which they’re trying to correct quickly; many syndicates have pulled out of property business as a result.

One of the latest syndicates to withdraw is Standard Syndicate 1884, which recently ceased underwriting property business with immediate effect.

“The danger is that London could become less attractive to global buyers, especially if it is promoting this negative news,” Papworth added.

Brexit has also created concerns over the relevance of London, but Papworth said he could not envision a scenario in which the UK does not have the solvency equivalence to trade with European partners—although this is causing people in London to lose confidence.

Referring to the current Lloyd’s profitability review of underperforming syndicates and lines of business, Papworth suggested the culture within Lloyd’s is at the heart of this problem, as it still trades in “the old-fashioned way”. He also noted that the business is overregulated, which means a lack of innovation.

“The underlying transactions are still the same; they’re still using paper to trade in Lloyd’s, which is absurd,” he added. “The whole industry has to evolve with the times.”

Papworth argued that blockchain could potentially change the entire communication chain, and help make the process of insurance buying and processing policies more efficient.

He has no concerns about technology wiping out brokers.

“If it wipes out a broker, then it was doing its job—being an advocate of risk, and a risk advisor and consultant,” he concluded.

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