Insuring Europe against unexpected events

Natural catastrophes, flooding, and heat waves: climate change is everywhere. Think of the recent 2021 floods in Germany, the Netherlands, and Belgium: they have an increasing impact on our lives. Yet only a quarter of the European population is insured against these events. Why is that?

Lots of companies are aware of cyber risk. It happens to more people and companies at the same time. For cyber risk, there’s a lot of insurance out there at the moment. Lloyd’s has 20% of that market, but not a lot of people are covered.

Then if we move to climate change, it is everywhere. If we think about Europe alone and think about the 2021 floods in the Netherlands, Germany and Belgium, we are quite exposed to that risk and the ocean. The ice is melting and the level of the ocean increases. And it’s all about solidarity. People that live in certain countries or regions are more exposed than others. But, climate change is everywhere, and that’s also another area where probably people are not protected enough.

Then COVID. That was our generation’s first experience of a worldwide pandemic. A pandemic is happening to lots of people at the same time. And it’s a real challenge from an insurance standpoint because we like independent risks. Luckily, we found a vaccine, but even if you have a vaccine, it’s complex. Some of the first ones needed to be stored at very low temperatures, and you also need to think about transportation.

Also, think about agriculture. Last summer, drought was everywhere, and now there is lots of rain. It’s hard to cope with that. How do we cover those crops? A lot of technology can be developed around those kinds of new risks.

There is also geopolitics. There is a conflict at our doorstep. There is the risk of war and plenty of other risks related to geopolitics. As you may have heard, Lloyd’s is involved in protecting some of the ships transporting grains out of Ukraine under the UN Black Sea Grain Initiative. So this is another way to show that you need to innovate every day, covering the new risks that are emerging.

Right from the start, even in the 17th century, we’ve been trying to innovate and partner with others. One thing that’s so special about Lloyd’s is that it’s a marketplace. And as I’ve mentioned, there used to be ship owners, brokers, and customers. I didn’t mention wealthy British lords who were covering those risks. Nowadays, these would be comparable to the more traditional companies like Munich Re, AXA, SCOR, and lots of different companies from everywhere in the world. We have capital coming from pension funds, private equity, etc. This shows that we need all human beings on the planet to cover those risks and address the protection gap, either by bringing more money to this kind of marketplace or by purchasing cover.

As a marketplace, Lloyd’s is welcoming innovation. There are a lot of different stakeholders on the market and we’ve always partnered with other people outside of the marketplace to bring them in and be part of this innovation. So what do we do at Lloyd’s?

We have the Lloyd’s Lab: a place where we welcome insurtechs and startups. We have launched ten cohorts already. We welcome them for a few weeks in London at the Lloyd’s Lab. This is where they are mentored by Lloyd’s’ market experts and senior leadership, and start to learn more about what we do, our specific risks, and those so-called distressed risks that we are covering, and then they learn more about pricing. This mentorship happens in all types of dimensions. We can also offer them more access to distribution and we’re organizing events. This is an opportunity for them to grow their network.

We are now focusing on Europe, to focus more on those risks that I’ve mentioned. Some of the risks can be more specific to some of the regions that we are covering here in Europe, and on any type of product. We’d love to welcome insurtechs on one of those future cohorts and solve some of our European-based issues.