More than half of middle market companies have experienced a cybersecurity failure despite a rise in spending on cybersecurity technology, and most are uninsured
London, UK (Sept. 18, 2019) – Pricing, cost reduction, change management, market modernization, and competition are the top five risks facing Lloyd’s, according to Chief Risk Officers (CROs) within Lloyd’s managing agencies. These internal factors rank ahead of exogenous factors such as cyber risk and climate change, according to a survey of CROs released today by the Lloyd’s Market Association (LMA).
The overall view of risk identified by the survey reflects a shift in focus from specific macro issues towards fundamentals. The key risks identified are highly interconnected, according to the survey report, prepared by a subgroup of the LMA CRO committee, led by Vinay Mistry, in conjunction with PwC, entitled The changing face of risk: breaking the vicious circle.
A majority of respondents are concerned about delegation of underwriting authority. 85% agree that the relatively high level of delegated business in the market is unsustainable unless the risks from these channels are managed more effectively. Almost half of respondents state that the preponderance of corporate capital at Lloyd’s means that future product innovation will take place outside the market, initiated by individual companies. The other half are undecided. Asked about talent, respondents said underwriting faces the greatest challenge relative to other industries, closely followed by data analytics.
Phillippa Smith, Chair of LMA CRO Committee and Group Head of Risk Management at Barbican Insurance, said: “In effect, these findings take us back to Risk 101: whereas we have focussed on macro-risk issues in recent years, we are now considering the bread and butter of risk management as the greatest threats. More widely, due to potential market fatigue on big topics like cyber, Lloyd’s CROs are focussed more on the operational implications. That vein of operational risks has flowed through to the risks identified in the survey.”
Paul Davenport, LMA Finance Director, said: “The timing of the survey, only a couple of months after a bruising business planning process, is likely to have strongly influenced views. But we believe the survey results are reflective of current risk issues that the boards of our member managing agencies are grappling with on an ongoing basis.”
Copies of the joint LMA/PwC report, The changing face of risk: breaking the vicious circle, can be downloaded here.
About the Lloyd’s Market Association (LMA)
Formed in 2001 and located in the heart of the Lloyd’s Building in the City of London, the Lloyd’s Market Association represents the interests of the Lloyd’s underwriting community. All underwriting businesses at Lloyd’s are members, together managing gross premium income of around £31billion per annum. For more information, visit www.lmalloyds.com.
Lloyd’s is the world’s leading insurance and reinsurance marketplace. Through the collective intelligence and risk-sharing expertise of the market’s underwriters and brokers, Lloyd’s helps to create a braver world.
The Lloyd’s market provides the leadership and insight to anticipate and understand risk, and the knowledge to develop relevant, new and innovative forms of insurance for customers globally. It offers the efficiencies of shared resources and services in a marketplace that covers and shares risks from more than 200 territories, in any industry, at any scale. And it promises a trusted, enduring partnership built on the confidence that Lloyd’s protects what matters most: helping people, businesses and communities to recover in times of need.
Lloyd’s began with a few courageous entrepreneurs in a coffeeshop. Three centuries later, the Lloyd’s market continues that proud tradition, sharing risk in order to protect, build resilience and inspire courage everywhere.
SOURCE: Lloyd’s Market Association (LMA)Tags: Lloyd's, Lloyd's Market Association (LMA), survey