His appointment as Head of Legal eight years ago ensured him a central position at Lloyd’s during a time of change. Now in the wider role of Director and General Counsel, Sean McGovern plays a crucial role in shaping the market’s direction.
Many different demands run through Sean McGovern’s average day as he juggles a diverse portfolio of responsibilities in his role as Director and General Counsel for Lloyd’s. These range from looking for ways to make Lloyd’s an easier place to do business to managing Lloyd’s relationship with the Financial Services Authority (FSA) and lobbying governments and regulators for change.
McGovern’s work helps form the commercial reality of the Lloyd’s market. A recent example is working with the UK Treasury to update the governance and business practices of Lloyd’s. The government has recently issued a consultation document that seeks to deliver precisely this. McGovern hopes that an updated Lloyd’s Act would remove the restriction on managing agents accepting business through a Lloyd’s broker only.
McGovern says the changes will mean the market would be able to access business directly from broker and clients around the world without unnecessary and outdated restrictions. “This is not to diminish the importance of the existing broker channels into London but simply gives the Lloyd’s market the flexibility to adapt to a changing and competitive global business.”
The same Act also restricts managing agents from owning brokers – or vice versa. This is another aspect that McGovern hopes will be liberalised soon. He says: “No other insurer is restricted from having links to brokers or vice versa. It’s a competitive disadvantage.” As for the governance changes that are proposed, McGovern sees significant benefit in streamlining Lloyd’s governance and bringing it more up to date with modern corporate practice. “Lloyd’s has changed significantly since the 1982 Act, as has the rest of the corporate world.”
Another side to his work involves responsibility for Lloyd’s international licences. He says: “Licences take care and maintenance, and when people talk about licences being the crown jewels at Lloyd’s, there’s a lot of work behind the scenes to ensure they remain in place.”
In addition to 450 regulatory filings a year, which are required to maintain licences, there is a continual dialogue with international regulators. “Regulation has a significant impact on the insurance business. You need to invest time and understanding in trying to influence regulatory trends as well as ensuring a good relationship with those that regulate you.” Given Lloyd’s unique structure, securing access to new countries presents some challenges.
Last year, McGovern led negotiations with Brazil’s regulator on the terms for which Lloyd’s would be able to access the Brazilian reinsurance market. Gaining access to a new territory in this way often requires Lloyd’s to be specifically recognised in legislation and regulations. As McGovern says: “There’s often some work needed in getting the political will to have a change made. It’s an education issue. By seeking special provisions, we are not asking for special treatment – we just need our unique structure to be recognised.”
Talking about the trends shaping today’s business environment and the importance of liability issues, McGovern sees that the sub- prime crisis is likely to increase the profile of liability protection and the number of actions against directors. “All businesses must take strategic and operational risks to their business seriously. Anything that leads to a greater understanding of the environment in which we operate must be a good thing. It is also fundamentally important to us because that’s where insurance can offer solutions and help people manage the risks to their business.”
Looking to the future, McGovern will be focusing on the implementation of Solvency II – the proposed new EU-wide regulatory regime for insurance – to ensure it does not adversely affect the market. He is, however, sure that Lloyd’s and the market will take it in their stride.
He says: “I’ve seen dramatic change at Lloyd’s across every aspect of the market, from where the capital comes from, the number and size of syndicates, the introduction of FSA regulation, the way we run and oversee the market, and it’s all positive. The market has always shown its ability to adapt.”
McGovern is also sponsor of the Lloyd’s graduate recruitment campaign, which recently won Best Employer Website, Best Graduate Campaign and Best Work of the Year at the Recruitment Advertising Awards. After a break of 11 years, the programme sees ten graduates enter Lloyd’s in September, with the aim of rotating them through the Corporation and market.
“We’d like the graduates to get a holistic view of Lloyd’s, both the Corporation and the market,” McGovern says. “With that in mind, we’d like to work closely with managing agents to have graduates spend some time with underwriters, and possibly have a graduate exchange with those in the market with their own programmes.
“Our shared long-term aim must be to keep talented graduates in the market.”
Sean McGovern’s CV
Sean McGovern was appointed head of Legal at Lloyd’s in April 2000 and is now Director and general Counsel. He is responsible for legal issues at Lloyd’s, the market’s relationship with the FSA, regulatory affairs around the world and developing Lloyd’s relationship with managing agents and brokers. He also led the team responsible for Lloyd’s award-winning graduate programme. He has a law degree from Manchester University and was with international law firm Clifford Chance before he joined Lloyd’s in 1996.
