Your Royal Highness, ladies and gentlemen.
This time last year, we held the first Lloyd’s City dinner here in New York. These dinners, which originated in London, are designed to emphasise the importance of insurance to the wider economy and the role of Lloyd’s within this. They are an excellent opportunity to bring together distinguished and expert individuals from the worlds of insurance, business, academia, and last but not least, our friends in the Fourth Estate.
Insurance has been described as many things in the past – the oil that lubricates the wheels of the economy, the glue that binds society and the white knight that comes to the rescue when disaster strikes. Lloyd’s is all of those things, and despite enormous political and economic changes over the last year, we have not faltered in our commitment to shoulder the risks of the world.
Our position as the leading insurance market remains unchallenged and our commitment to the US is resolute. The ties that bind us to you and you to us remain as strong as ever. Our US foundations were laid over a century ago, when our promise to pay all claims from the 1906 San Francisco earthquake cemented our reputation as the market that steps up to the plate and doesn’t waver on its obligations. It is a promise that has stood the test of time as has our market.
Our appetite for risk is as strong today as it was 321 years ago when merchants first gathered together to seek coverage for their ships. Our client list may be a little more diverse now but our role is still the same – to provide piece of mind and to enable businesses to go out and take calculated risks. This is borne out by the fact that we continue to be a major provider of insurance and reinsurance solutions across the world. The US is our largest market and we are the second largest surplus lines insurer.
It is of course a two way street. Not only do we have to remain true to our promise, we also have to ensure that we are financially secure enough to pay out claims when they arise. It is no accident that we have come through the recent economic crisis unscathed. We have worked very hard to maintain our financial strength and stability and ignore the critics who attacked us for being too conservative in our investment approach. How times have changed – those same critics are now labelling us as a safe haven - and we are happy to wear the mark of conservatism as a badge of honour.
Of course we haven’t survived for over three centuries by being a conservative business. Not only are we prepared to take the tough decisions necessary to ensure that our market remains profitable and strong, we are also prepared to take a stand on issues that really matter.
I therefore want to just take a moment to add my voice to the debate about the path that the financial services industry should take on the long road back to a new normality. As we embark on this journey, it is imperative that two things happen. The first is that we don’t avoid the difficult decisions and the crucial changes that need to be made within the sector to ensure that the economic crimes of the last two years are never repeated. While I am sure that none of us in this room want to see more regulation, there is a clear need for better regulation and both President Obama’s recent package of market regulatory reforms and the EU plans for regulation of banks will go some way to do this, but for these changes to have any potency they must be more than optimistic slogans and brave words.
They have to be translated into pragmatic action coordinated across the world. We also can’t be lulled into thinking that protectionist policies, that seem to be becoming increasingly fashionable here, are our salvation. They will serve only to exacerbate what is already an incredibly grim situation. Globalisation may have expedited the current crisis but nationalism is definitely not the right answer.
As I am sure you are aware, Lloyd’s has had its own problems, in what is now happily, the distant past. We learnt our lessons and embarked on a root and branch change of our business practices, introducing a new franchise structure for the market and introducing stringent standards for underwriting and risk management. We also stuck to what we are good at – focusing on providing specialist insurance and not being lured into the exotic products that have been the downfall of a number of our competitors.
At Lloyd’s we went “back to basics” and it is my belief that the financial services industry now needs to do the same. Markets and products must be more transparent. There has to be a culture where everyone is prepared to challenge and ask questions rather than one that is driven by excess. The public and their elected representatives will simply not tolerate a repeat of what has just occurred. Therefore the second thing that we must do is to end the era of mistrust that currently exists around financial services.
Over the course of the last year, the reputation of the financial services industry has taken a huge battering but I believe that all is not lost. There are a number of sectors that remain vibrant and relatively untarnished by the economic storm that has surrounded them. Insurance is of course one such sector. There has been some contagion and there have been notable insurance casualties but the impact overall on our sector has been limited so far. Insurance is obviously an economic necessity, not a discretionary purchase and homes, cars, businesses and workers all need to be insured irrespective of the state of the economy. Furthermore, the challenges of the current economic conditions will provide opportunities for insurers and other businesses too.
We also have a responsibility to show leadership – whether that be in thought or action. Lloyd’s is doing this through its 360 Risk Insight thought leadership programme which is breaking new ground in the business world in reaching out to other sectors and indeed the world beyond commerce, to research and debate key issues of risk which will face us all in the future.
We are truly the place where the world takes risk and no matter how much our economy and society change our promise that we made in 1906 remains the same. That promise began a partnership with the United States that remains as valued and vital today as it was a century ago.
Lloyd’s Gold Medal for Bravery
Ladies and gentlemen, his Royal Highness the Duke of York is a pilot, who flew Sea King helicopters for the Royal Navy during the Falklands War. From one pilot facing adversity to another who showed exceptional courage during a more recent drama and in very close proximity to where we are sitting tonight.
Everyone gathered here this evening has a particular appreciation for risk and the need to prepare for the unexpected risks that can arise. Less than two minutes into US Airways Flight 1549 en route to Charlotte, North Carolina, the plane’s engines were struck by a flock of birds. The crew, and most notably its captain, Chesley Sullenberger, or “Sully” as he is also called, applied his 19,000 hours of career flight experience for the remaining three minutes and thirty seconds that the plane would stay airborne.
The line between the ordinary and the extraordinary is often so minute it can be barely perceptible. On this day, however, it was evident. A perfect landing in near-freezing water and the survival of all 155 passengers and crew was, as Governor Patterson put it, ‘a miracle on the Hudson’. It doesn’t bear thinking about but if the plane had landed 400 yards to the left or the right we would have been facing another 9/11.
More than six months later, Captain Sullenberger’s achievements continue to resonate. In the aftermath, Captain Sullenberger has been quoted as saying “I did what I was trained to do.” If only the banking sector had been following this philosophy over the last few years!
In 1836, Lloyd’s established a medal to recognise acts of courage at sea. The medal’s title went through various iterations as we sought to recognise bravery in other spheres. In 1974 it became the Lloyd's Medal for Saving Life. Gold, silver and bronze medals have always been struck. The first and to date the only gold medal was awarded to Captain Edward Evans in 1921.
I think it is no small testament to Captain Sullenberger that he is to become only the second recipient of the gold medal in 173 years. We at Lloyd’s wish to join the distinguished line of those who have recognised him for his exceptional judgement, calmness, bravery and selflessness in the face of such unexpected and terrifying circumstances. Captain Sullenberger we are delighted that you were able to accept our invitation to join us this evening, especially since Mrs Sullenberger was able to accompany you.
Ladies and gentlemen, please join me in congratulating Captain Sullenberger as he comes up to receive the Lloyd’s Gold Medal for Saving Life from HRH the Duke of York.
