Ladies and Gentlemen,
First of all, please accept my apologies for not being in Paris today. Although I am glad to join you remotely, I would much rather be with you in person enjoying French cuisine than here in my office in London.
The reason I cannot join you as planned, is because of the strikes taking place in France against the Government’s proposal to raise the retirement age, which make it impossible to keep a tight schedule.
Of course, strikes have a more serious effect than depriving me of my lunch today. During the strikes in September, one in four teachers were not in school, around 50% of flights stayed on the ground at Charles de Gaulle and half of the trains in France were not running.
It is understandable that people are concerned by the prospect of working longer than they had expected although I have to say, that I took the position of Chairman of Lloyd’s at the age of 61, which I hope is a sign that people are still able to work profitably after the age of 60.
However, I also have some sympathy with governments across Europe which are battling the need to cut budgets and fund pensions for an ageing population whilst wanting to retain the high levels of social protection which we enjoy.
In crude terms, they are facing the dilemma of every household – how to spend less but still be able to feed the family. But there is, of course, an alternative formula. If you earn more, you can maintain the services people become accustomed to.
One of the points, which I had hoped to discuss with all of my friends and colleagues in Paris, was precisely this: is Europe doing enough to fuel growth and create wealth? Particularly given the emergence of China as the world’s second largest economy.
At present, our class, the business class, particularly in financial services continue to be viewed with suspicion by some of the populace and some politicians. Following the Global crisis, we are also seeing a strong public demand for more regulation in the financial services industry. This is not surprising. People feel angry with both the banking industry and with Governments for not spotting the problems earlier.
But for me, there is simply no point in having regulation for regulation’s sake. It is a waste of time to struggle with regulation that does not have an impact. What I want to see is not more regulation, but better regulation.
And this, of course, must be carefully balanced to protect consumers and society whilst allowing the economy to grow, and enterprise to foster.
Any new rules must have a clear purpose and rationale. One of my major concerns with the current rush to regulate, is that rules and structures which are designed to solve problems of systemic risk in the banking industry will have a negative impact in the insurance sector.
Insurance, as everyone in this room knows, weathered the financial crisis in good shape. Our business models, and crucially our risk management and our capital management is entirely different from the banks.
But what is perhaps even more worrying, is that Europe seems to be castigating success. That a safety first policy has taken hold which will stunt growth and entrepreneurialism.
So, if I leave you with one question to ask over your coffee and digestifs, it is: is Europe ashamed of success?
I read a fascinating account in the Economist’s Charlemagne column on France’s attitude to wealth. It concluded that whilst, on one hand, there is much angst in France about the business community, on the other hand, the country is a successful one. France has more Fortune 500 companies than Germany for example. The article concluded that France has a dark secret – the truth is that it is a capitalist society.
I hope that today, tucked away in the [insert name of restaurant] that we can indulge our capitalist instincts and look at how Lloyd’s can do more business in France.
Lloyd’s has had a presence in the country since 1947, for 63 years, which I think puts us over even the proposed new retirement age in France. Even so, I hope that, in its sixties, Lloyd’s can have a burst of energy and improve its position in France. Lloyd’s business in France is low compared to many other markets. And I hope that we can change this. Our new representative, Guy Antoine de la Rochefoucauld, has been taking a hard look at why we are punching below our weight in France. And his aim, over the next few years, will be to ensure that the French insurance industry understands how Lloyd’s can fit into their business.
We want to do more business in France, and we think we have some real advantages. In many fields, we possess highly specialised underwriting knowledge. For example, we assisted in the creation of the Terrorism pool here in France, and are one of its main reinsurers.
In terms of paying claims. Lloyd’s has a reputation for always paying valid claims. We did this when an earthquake struck San Francisco in 1906. We did this when the Titanic sunk in 1912 and more recently we had to dig deep into our pockets when the World Trade Center fell in 2001.
However, we are now giving very serious attention to how we can pay claims faster, with a new project aimed at improving efficiencies. And we have created a claims academy to encourage and develop new talent in this very important part of any insurers activities.
Another aspect of Lloyd’s which is less well known, is our capital strength. Lloyd’s is a partly mutualised market. This means that clients can fall back, not just on the capital of an individual firm, but also on mutual assets held by the Corporation of Lloyd's. This highly secure capital base is one of the reasons why we retained A+ ratings this year, a difficult year for the insurance industry.
I know that Guy-Antoine is keen to explore another enduring myth about Lloyd’s, that we are difficult to access. I would argue that it is not that we are difficult to access, but that we are different. Over the next year, Guy will work on organising events and roadshows to explain how brokers and insurance companies in France can bring their business to Lloyd’s.
Crucially, we want to get this message out to the provinces. I know that Lloyd’s can help smaller and regional brokers across France to manage their risks, whether that involves insurance for a top French football team or to cover terrorism or cyber risks.
Ladies and Gentlemen,
The global economy remains in a precarious position, and the challenges of reducing budget deficits across Europe suggests that 2011 will remain difficult, but I hope that we, businessmen and women across Europe can continue to focus on growth and opportunity. I believe that there are many more opportunities for Lloyd’s to work with the French insurance community and I hope that, together, we can grasp these.
