Lord Levene, the chairman of Lloyd's of London, admitted yesterday that the insurance market needs to pull itself out of the "Dark Ages", condemning the current antiquated paper-based operations as "ridiculous".
Responding to recent criticism of the Lloyd's market, led by several of its key underwriters, Lord Levene of Portsoken conceded that he shared their frustrations. But he added that he was confident Lloyd's recently published three-year strategy had set the market on the right course for reform.
"There are some large operators who have said that in the future we've got to get our act together electronically, rather than live in the dark ages, and we completely agree with that," he said. "I'm fed up with coming up in the lift and finding people carting around truck loads of paper files. It's ridiculous. This is 2006. Nobody else does it, and we've got to address it. If people want to say that Lloyd's should not get complacent if it wants to stay at the forefront of this industry, I would agree with them."
Last month, Robert Hiscox, the chairman of Hiscox, one of Lloyd's largest underwriters, warned that Lloyd's would "wither away" if it did not bring itself into the 21st century.
Hiscox is one of a handful of major UK insurers to have switched its focus beyond the London market in recent months, establishing a Bermuda-based operation. Mr Hiscox claimed the speed, efficiency and lighter-touch regulation of Bermuda makes it a more attractive place to do business than London. Specifically, he hit out at failed attempts to transfer Lloyd's business on to an online platform. Earlier this year, after the latest Lloyd's IT hub, Kinnect, was abandoned, Hiscox joined forces with five other insurers - Amlin, Beazley, Catlin, Kiln and Wellington - to create its own electronic system. The consortium, known as G6, is hoping to have a system ready by the summer. But many analysts are sceptical that they will be able to find success so quickly.
Lord Levene's comments came as Lloyd's unveiled its annual results yesterday, revealing that last year's devastating hurricane season had driven the market to a £103m loss.
Luke Savage, Lloyd's acting chief executive, said he was pleased with the results, claiming that generating such a small loss during a year of exceptionally high claims was a mark of how far Lloyd's had come since the 9/11 terrorist attacks. In 2001, Lloyd's ran up a loss of about £3bn on the back of some £2bn of net claims. In 2005, the market's £103m loss came on the back of £3.3bn of claims.
Mr Savage said the insurance market had modelled a Gulf of Mexico windstorm catastrophe, costing the industry $60bn (£34bn), six months before hurricanes Katrina, Rita and Wilma struck the US's south coast, and this had led several of its underwriters to adjust their risk levels in the area.
Lord Levene said he still believed 2006 would be a tough year for the market. Lloyd's new chief executive, Richard Ward, joins the market on 24 April, replacing Nick Prettejohn, who left to go to Prudential earlier this year.Reuse content