60 seconds with Jose Ribeiro

What trends are you seeing in the global economy?

There is a massive transfer of wealth from developed countries to those in emerging markets and we also see far more wealth being generated in Latin America and Asia. In particular China and Brazil are the engines of growth in those regions, but other Latin American and Asian countries like Argentina and India, as well as those in the Middle East and Eastern Europe, are also benefiting.

Has the financial crisis affected this trend?

In the long term emerging markets will continue to grow - international demand will not go away and we will increasingly see these countries coming to the market for consumer goods and financial services like insurance. That is not to say it will always be easy and there will not be challenges – for example Europe’s problems with the indebted Greek economy or the current threat of increased protectionism.

What role does insurance have in facilitating trade and economic growth?

Insurance is the backbone of international trade and development. Without insurance most forms of international trade would not be possible or would be too risky to attract investment. Throughout Lloyd’s more than three hundred year history the market has insured the vessels of trade – the ships and cargos of the past that now also include the pipelines and aircraft of today. Insurance also has a big role in ensuring that people have confidence that they will be paid – through political risk and trade credit insurance – as well as property and liability insurance to protect investors and consumers when things go wrong.

Will economic development result in rapid growth in insurance?

There is not an exact correlation between premium growth and economic development. For example, a country like Brazil does not have the earthquake and hurricane exposures of the US and so would not buy large amounts of catastrophe insurance.

There are also cultural drivers when buying insurance. In the US and Europe, economic growth is driven mostly by institutional investors, and they usually want to protect their investments with insurance. This is not typically the case in countries like India and China where insurance is seen as a cost rather than a way to protect assets and finance risk. Part of the role of insurers and brokers is to educate and show how they can make more profit by transferring some of the risk.

What does the growth in emerging markets and international trade mean for insurance?

We now see new global companies emerging from countries like India, China and Brazil, and they are becoming more sophisticated in the insurance they buy. This has real implications for insurance companies and will shape their services in the future. We increasingly see companies from these countries knocking on our door as they are looking to go global.

What implications are there for Lloyd’s?

As economies grow and as foreign investment increases, we will increasingly see regional hubs developing as an alternative to global insurance centres like Lloyd’s. The insurance industry will naturally create its own hubs - we already see Singapore and Hong Kong doing well, and China is looking to develop Shanghai into an international financial services centre. Lloyd’s will face more competition and we will need to find effective ways to be present in these new emerging financial centres.

Would you expect to attract more business from emerging markets?

China will eventually be the biggest economy in the world and the largest insurance market, outstripping the current number one, the US. North America currently accounts for 38% of Lloyd’s premium, but this has reduced in recent years as the proportion of business from emerging markets like Asia and Latin America has grown.

Will Lloyd’s have to change tack?

Lloyd’s is not about to radically change its international strategy. We are also conscious that there will be different solutions for the different companies that operate in the market. We have a very diverse mix of stakeholders at Lloyd’s – many of which are global insurers in their own right with their own international strategies and platforms. Our role in market development is to talk to stakeholders and see where Lloyd’s can add value and make the market more efficient and successful.

Does this mean opening more offices overseas?

No, the best solution will not always require Lloyd’s to open offices. We have done this in China and are doing it this year in Russia. We always look at ways to open market access but we have to find the most appropriate solutions.