Lloyd’s CEO John Neal has urged the insurance industry to accelerate innovation to address growing risks from climate change, cyber threats and geopolitical instability.
Speaking at the S&P European Insurance Conference 2024 in London yesterday, Neal emphasised insurers face unprecedented challenges.
“We live in a riskier world,” he said. “The insurance industry has to evolve and innovate at a faster rate than it perhaps has ever done in history.” Neal pointed to climate-linked losses as a prime example, noting data from rating agency S&P data shows 2024 will be the fifth consecutive year where insured weather losses will exceed $100bn.
Cyber risks also pose a growing challenge, particularly as they remain difficult to model effectively. According to Neal, Lloyd’s currently insures around 20% of global cyber risk volumes, but he warned “the rapidly accelerating pace of cyber and data risks shows how extensive the risk landscape will be”.
Addressing reports earlier this month about restructuring at Lloyd’s data, operations and change departments, which is said to involve outsourcing some functions, Neal dismissed concerns over job cuts at the corporation. “If we can grow, I ultimately think there’ll be more people employed directly or indirectly in Lloyd’s in five or 10 years’ time than there are today.”
Neal also highlighted global protection gaps, observing that insurance penetration in many wealthy countries remains low compared to the US. “Even in developed economies, there is still not yet the belief in the ultimate transfer of risk,” he said.
He pointed to premium growth currently “growing at three times the rate of global GDP” as evidence of the growing awareness of risk transfer. He cautioned, however, that meeting evolving demands will require not just innovation, but also collective action across the industry – something Neal has called for multiple times in the past.