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Thinking globally, looking locally New Lloyd’s General Representative for Australia Chris Mackinnon (above) typifies the market’s desire to encourage the employment of local expertise. The UK-born insurance broker started work at Lloyd’s a few weeks ago, ending a long-standing preference to fill the position from the London workforce. Before joining Lloyd’s in Sydney, Mr Mackinnon had worked since March 2013 as chief executive of Gow-Gates Insurance Brokers. He has replaced Adrian Humphreys, who has joined Steadfast. Reporting to Singaporebased Head of Asia-Pacific Kent Chaplin, Mr Mackinnon has plenty of international experience to add to his wide knowledge of the Australian market. Before joining Gow-Gates he was based in London with Arthur J Gallagher for nearly four years, most recently as executive director strategy and development. Before that he worked as a broker for 21 years at Marsh, Aon, CT Bowring and Gallagher. His new role involves managing Lloyd’s relationships with brokers, underwriting agencies, service providers and regulators, overcoming barriers to placing business with Lloyd’s and identifying new commercial opportunities.

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made very good progress on modernisation in the market. “So we’ve got the plan in place, we’ve got the managing agents and brokers collaborating with us now in a very positive way, and I think that’s very, very important. “Now I can see the enthusiasm for Vision 2025 building, and that’s definitely had an impact in the market. “It’s not like command and control – it’s more like herding cats. But we are doing it. I think in a sense we’ve been more successful in herding the cats in the past 12 months than we were in the preceding year. “Because one of the great things we have to do is to make the Lloyd’s platform attractive, as the competition from elsewhere increases. “So end-to-end processing is going to be vital; and it has to be an international strategy. We’ve also got to be user-friendly. “If you look at the challenges – they are pretty obvious with things such as very low interest rates and pressures on premiums. And in the reinsurance area, you’re dealing with alternative capital, and that is something we are watching very carefully.” Mr Nelson believes an equal challenge for the market in particular is the need to concentrate on innovation to deal with emerging risks. “We have got to keep innovative. When you talk to major insurers around the world, including here in Australia, new risks are being created. We have got to provide the solutions for that. The real challenge is for us to keep up. “Funnily enough, I can sort of feel a new spring in the step all of a sudden. I think people realise innovation is an imperative. And it will help reinforce our position as the global home of special insurance. I think in cyber insurance, for example, we are certainly up there.” Lloyd’s certainly is. The size of the global market in cyber insurance has grown from $US850 million in 2012 to an estimated $US2.5 billion last year. Mr Nelson says some insuranceNEWS

Lloyd’s underwriters have reported a tenfold increase in cyber insurance submissions and enquiries. However, Mr Nelson’s time at Lloyd’s has instilled caution in his drive to help Lloyd’s become more reactive to emerging risks. “If you go headlong into a new risk without the data and without the experience, we all know – because it’s happened in the past – what can happen. If you go back 30 years, I used to look at Lloyd’s in horror as one crushing error after another happened.” Such errors included the great asbestos debacle of the 1990s, which resulted in the

set firmly on building strategic presences not just in such economic powerhouses as Brazil, India and China, but also potential high-performers in southeast Asia and South America, where insurance has previously been a low priority. “We’re making good progress in South America,” he says. “We’re just about to open our office in Mexico and at the end of the year we will open an office in Colombia.” India remains a potential insurance powerhouse. Its woefully slow Parliament and bureaucracy will hopefully open up the country more to foreign insurers in the next few months. “In China we’ve secured our

“When you talk to major insurers around the world, including here in Australia, new risks are being created. We have got to provide the solutions for that.” bankruptcy of many individual investors – known at Lloyd’s as Names – who over more than 30 years had gambled on taking up unlimited liability for policies written for companies with asbestos exposures. “Now there’s a very high level of groups building up data on new risks and building modelling techniques,” he tells Insurance News. “I think it’s very important to support it so that it’s a staple.” The Vision 2025 mantra is to go forth and multiply, and Mr Nelson believes Lloyd’s increased exposure in countries with emerging economies is already bearing fruit. A recent survey by the Boston Consulting Group found that more than half of future growth is going to come from emerging markets, and warns that London’s global leadership in insurance “will become increasingly challenged”. Mr Nelson has Lloyd’s sights February/March 2015

licence for a Beijing branch to join our Shanghai office, which is very good news,” Mr Nelson says. “We’re also about to open an office in Dubai. “The point is that countries such as China, India, Brazil, Mexico and Turkey will form the majority of global GDP in the future – and these countries are among the least insured in the world.” Mr Nelson says Lloyd’s research has demonstrated that a 1% rise in insurance penetration in such countries would translate to a 13% reduction in uninsured losses, a 22% reduction in taxpayers’ contribution following a disaster and increased investment equivalent to 2% of national GDP. Another benefit of diversifying Lloyd’s business activities is the impact it would have on its investment spread. “If you look at our capital base at the moment, it’s basically the United States, Bermuda and

Profile for Insurance News (the magazine)

FEB/MAR 2015 - Insurance News (the magazine)  

The next year is shaping up to be one of the most challenging for insurers and brokers, as investment income and premium rates plummet. The...

FEB/MAR 2015 - Insurance News (the magazine)  

The next year is shaping up to be one of the most challenging for insurers and brokers, as investment income and premium rates plummet. The...