Global insurance spending likely to double in the next decade, says Lloyd's Neal - Reinsurance News

Speaking to the Financial Times (FT), John Neal, Lloyd's CEO, suggested the increase in global insurance spending over the next decade is to be driven by a greater perception of risks such as bank failures and climate change.

According to FT, Neal noted that financial risks like bank failures as well as systemic threats such as pandemics and climate change would fuel demand for cover.

"The purchase and penetration of insurance is going up at a rate that is likely to see insurance purchases double in the next decade, life and non-life," Neal said.

He highlighted the continual expansion of core insurance markets such as US property, as well as rapidly-growing segments such as cyber and intellectual property cover.

As per Lloyd's recently published outlook figures, premiums written across the market in 2023 are set to hit around £56bn, up from almost £47bn in 2022, as prices rise for commercial insurance and reinsurance.

Neal observed that it was the first time that Lloyd's had provided such forecasts, and it was part of a concerted effort to shake off the market's "quirky" reputation and make it more "user-friendly" to outside investors.

The outlook came as part of Lloyd's full year results report, in which it announced an improved underwriting profit of £2.6 billion, although a net investment loss of £3.1 billion resulted in an overall loss before tax of £800 million.

Neal also said that Lloyd's should be held to the same standard as a listed company and would "have an obligation to come back and tell people" if performance diverted from its targets.

Lloyd's has just under £33mn exposure to banks' AT1 bonds that includes an unspecified amount to Credit Suisse.

The CEO said Lloyd's was "alert" to the current problems in the banking industry and any spillover to insurers and reinsurers.

"Credit to governments and credit to the regulators; they have learnt their lessons from 2007, 2008, they are acting swiftly and they are acting efficiently. So far, so good," Neal continued.

The FT report notes that less than a tenth of Lloyd's almost £100bn in its investment portfolio is directly exposed to banks, with half of that in the US and a very small share for regional banks.

John Neal was appointed Chief Executive Officer of Lloyd's in October 2018. He was previously Group CEO of QBE, a global insurance and reinsurance business with a significant Lloyd's footprint.

In this role, he was responsible for running a $14 billion gross written premium (GWP) business with over 14,000 employees in 37 countries.

Before becoming CEO, he held several roles at QBE including Chief Underwriting Officer and Chief Operations Officer of the firm's European operations.

In related news, earlier this month, Chief of Markets, Patrick Tiernan, said that Lloyd's insurance and reinsurance market is seeing an uptick in reinsurance submissions in the first quarter of 2023, as syndicates and participants work through the impacts of the January renewals.

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