For me, the next placement is Claims (where Jess is now), and I’m really looking forward to getting stuck into a new side of the Corporation, and getting a good grounding in an area on which the whole industry ultimately hinges. You don’t make your name in insurance without making a name for a fair and fast claims process. I guess the challenge for Lloyd’s, which historically has had that reputation, is to maintain its place as a market leader moving forward.

Recently, I have been doing more and more work for the Class of Business (CoB) team. These guys are also part of the Underwriting Performance (UP) team, but rather than the account executives who manage a portfolio of syndicates, they take care of specific classes of business (e.g. marine or aviation) across the whole market.

The work I’ve been doing with this team has been more of a research analyst’s role, and the work has been on more of a whole market basis, rather than with specific syndicates. I’ve really enjoyed gaining a bit more of an overview into market wide trends in some of the major classes of business, and it has really helped me better understand some of the key market drivers.

As well as the higher level overview work, the CoB team have also thrown some work my way with respect to more specific events. The recent Chilean Earthquake, the 7^th biggest ever recorded is an example of this, and I have been trying to help work through the market data we have access to in order to ascertain Lloyd’s exposure. Another, less recent, example was the West Atlas offshore oilrig, situated in the Timor Sea of Australia. This rig was leaking oil into the sea for weeks before eventually the inevitable happened and it caught fire. ‘Offshore Energy’ is a large class of business at Lloyd’s, so I was helping to identify which syndicates were likely to have suffered losses from the event..

On top of this work, I have been given the opportunity to spend some time in the market, shadowing a few underwriters and brokers. This has been a great chance to get a feel for the two sides of the profession and has already helped me form an idea of which I would rather do in my market placement, which I will move into from Claims, in September 2010.

All in all, its been a great experience at UP, with bucket-loads learnt not just about the insurance industry as a whole, but also the market-leading way in which Lloyd’s goes about it’s business. So, without much further ado, it is goodbye to UP, and hello Claims…

http://www.youtube.com/watch?v=HmZm8vNHBSU

‘You wouldn’t steal a car…

You wouldn’t steal a handbag…

You wouldn’t steal a mobile phone…

You wouldn’t steal a movie…

Film piracy is a crime’

This is true. No doubt about it. A piece of clever advertising and piracy deterrent aimed at waking people up to the fact that watching dodgy copies of the latest releases not only makes you feel a bit sea-sick as the hidden cameras wobble around, and irritates you when the person who was sitting two rows in front of the ‘pirate’ gets up to go to get a re-fill of popcorn at that key moment; but is also in fact a crime: stealing from the move producers, film studios and multi-billion dollar grossing moving stars.

So what does this have to do with Lloyd’s? Well, directly, very little. Except that I am currently helping with a project addressing the issue of fraudulent insurance claims. And, more specifically, how to prevent and detect them. The ABI (Association of British Insurers) recently published a report which found that 44% of us think that it is either acceptable or borderline to increase the value of a claim, or slightly twist the truth. The recession is expected to further increase this statistic as the population becomes more cash-strapped.

So coming back to my original point, if the typical man on the street wouldn’t steal a phone or rob a jewellery store, why is it that it seems more acceptable to twist the truth when a mobile phone gets damaged or add that extra diamond ring onto a claim following a household burglary? Well, let’s face it, insurers don’t typically have a glowing and cuddly reputation, so who is it hurting?

Well, five months here on the graduate scheme and there seems to be two key responses to this line of reasoning:

1. Lloyd’s reputation is for paying all valid claims, and the Lloyd’s Claims Team’s purpose is to try and ensure that our reputation for fast and efficient claims payment is maintained. In fact, Lloyd’s claim-paying reputation stems from the 1906 San Francisco earthquake where Lloyd’s Underwriter Cuthbert Heath famously declared ‘pay all claims’. Maybe insurers aren’t all that bad…

2. Plus, the ABI found that fraudulent claims in fact add on average £44 a year to a household’s general insurance costs. So, ultimately, it is the other policy holders who wind up footing the bill for Mr. F. Raud’s new iPhone.

As I am sure you have read, Lloyd’s is the world’s leading specialist insurance market, so you wouldn’t automatically expect the likes of mobile phones to be covered here.  However, through our Coverholders and Delegated Authority  some syndicates do write the kind of personal lines that are exposed to this form of fraud. And while it is probably easier to fake the loss of a phone than it is a fairly substantial ship, this does not exclude the specialist big risks from fraudulent activity.

So Lloyd’s role, and where the work I am doing comes in, is to work out how Managing Agents can best minimise the costs of fraud, because ultimately these costs do get passed back to the clients in their premiums. We have been looking at red flag systems, behavioural psychology analysis and the use of databases to help identify attempted fraud, and even better, prevent it. (If you want to find out more, the following guide goes into more depth).

I recently had my mobile phone stolen and ironically (given my career choice), didn’t have any insurance… suffice to say, I will be making do with my creaky old flip phone circa 2003. It has a colour screen and everything, albeit slightly cracked …

Within this team is a group focussing on emerging risks, and is where my current placement has its focus. I have been tasked with producing reports on a number of ‘emerging risks’, which are seen as topics that are potentially significant, but are either not well understood or allowed for in insurance contracts.

It is a fascinating team to work in, especially with the wide ranging topics which we discuss on a daily basis, and this does involve a lot of thinking ‘outside of the box’ and keeping an open mind.

One area I am looking into is that of the effect of space weather on earth, which can throw up some very scary scenarios. Similar to writing those dissertations at university, this involves a lot of research, reading complex theories and ideas, and speaking to experts in the field. And what ties this altogether is linking the risks with the insurance industry, and this is where value is really added.

What helps in this situation is talking to various people across Lloyd’s, and tapping into their experience and expertise to help bring to light the potential insurance impact. Historically, the largest geomagnetic storm observed was in 1859 by British astronomer Richard Carrington, and saw a major impact on the telegraph systems in place at the time. Given our dependence on technology in this day and age, what effects would another Carrington event bring?

Another interesting area I am looking at is the London 2012 Olympics. Being only a couple of years away, I am looking at the risks associated with holding such a large sporting event, and seeing what is being done to ensure that these Games are a success.

Obviously with an event on such a large scale the risks are as long as my arm, but a few include whether there is an impact from the economic downturn on the delivery of key venues and infrastructure, the increase in potential terrorism activity, crowd management and stress on the transport infrastructure including the impact of flash flooding. This is giving me a great insight into the insurance cover associated with holding the Olympic Games, and the pressures on a host city to deliver.

With all things emerging risk in my mind, I must ensure I keep a close eye on my upcoming graduation day from the Lloyd’s Graduate Scheme at the end of March. Being one of the original Lloyd’s graduates, I must start thinking of my next steps…

However, we also keep an eye on political developments in the UK.  I have to admit I am a bit of a geek for UK politics and like to keep up-to-date with all the gossip from Parliament.  However, the approaching general election has loomed as a significant issue for Lloyd’s.  Why you may ask?  Well, much of the political campaigning is likely to focus on the economy and how to prevent another financial crisis – this of course has implications for Lloyd’s, as any financial services legislation could affect us. 

Our work on UK issues takes many forms.  It could be responding to a consultation paper from the FSA, it may be listening to or attending select committees in Parliament or it may involve tracking amendments and debates on proposed legislation.  On top of this, the GPA team often attend seminars and lectures on key issues to provide us with an alternative or insider view on an issue. 

For instance, I attended a business breakfast meeting last week with Peter Riddell from The Times (great to get an invite to such events as the breakfast is normally yummy!)  He was generally speaking about the outcome of the elections and what could happen if either one of the major parties won. There has been much speculation amongst my team about the date of the election, with everyone apparently hearing something from someone that confirms one date or the other. However, Peter Riddell firmly came down on the side of 6 May. 

From a Lloyd’s point of view this is interesting as we are monitoring a number of Bills currently undergoing parliamentary scrutiny (two Bills of note are the Financial services Bill and the Bribery Bill). If an election was held on 6 May, Gordon Brown would have to announce the election by 12 April at the latest – if you then take into account Easter recess dates ( which secretly have not been announced yet) this leaves very little time for any Bills to reach Royal Assent.

Our team also meets with key figures in the leading UK parties. Last year, the Conservatives released their white paper entitled ‘From Crisis to Confidence: A Plan for Sound Banking’ with one of the headlining policies being their planned abolishment of the FSA and the transfer of regulatory power to the Bank of England and a new consumer protection agency. 

Of course, there is a strong possibility that we may end up with a hung parliament in which no one party has an overall majority of seats.  In this case, the Conservatives (if they won the largest share – not a majority) would have to form some kind of coalition government which could have implications for their political agenda including the disbanding of the FSA. It is therefore important that my team keep abreast of all developments and plan for any eventualities that could arise.

This may be the last blog from my sunny seat on the 5th floor of the Lloyd’s building. I have just confirmed my next placement and will be moving up to the dizzy heights of the 12th floor to join the Thought Leadership team (confusing term but essentially the 360° project is the main project within this team).  Will let you know how the big move goes!

Catlin, a managing agent at Lloyd’s, had commissioned an expedition, which Pen led, to perform a transect across the Arctic, taking measurements of the thickness of the sea ice, and the lecture was his report. To date, all the measurements and subsequent calculations regarding climate change and the speed at which the ice caps were melting, had been done using satellite imagery and computer software. This was the first time actual measurements were taken the old fashioned way… walking across the Arctic with a big hand drill!

The results they gathered were worrying however, with the net effect being that the ice was melting rather faster than the satellite imagery was showing. Areas where thick old ice was predicted, new thin ice was found, suggesting that some areas may even have been open water during the summer.

 My course at university included a lot of conservation biology so listening to Pen talk of the possible knock on effects of his discoveries was really interesting for me. I found myself listening and thinking of the biological implications, and from these started to think of how climate change will affect different areas of insurance. It reinforced what I was told when applying, that the scheme is generalist, and that Lloyd’s has something to offer everyone.

I think we all get a bit blasé when you hear the usual slogans rolled out by employers, especially in the wake of the graduate milkround. It’s easy to be cynical and dismiss these out of hand, and I have to admit to being guilty of this in the past. So, when I signed up for Lloyd’s, I fully expected to leave my biology behind me, but the breadth of this market, the variety of risks they cover and the factors they have to take into account are so far reaching.

Furthermore, there is an emerging class of business called Environmental Impairment Liability (EIL), where the insurer takes on the risk of having to pay out if the insured accidentally pollutes the environment. The difficulty here is that placing a value on the environment, when working out 1) the premium to charge and 2) the potential cost of a claim (which equals the cost of reinstating the area to its original state) is often impossible. For me, this is again a chance to use my biology at work, as my dissertation was a discussion on the best way to place an economic value upon biodiversity.

I don’t think I am the exception, lucky enough to have an irrelevant degree which happens to cross over in a few areas. There are so many risks covered by Lloyd’s that there will be occasions where your unique perspective will bring useful insight.

There really does not seem to be an ideal degree for Lloyd’s, just look at the some of the degrees of current grads – Engineering, Classics, Economics, Geological Sciences, Maths, English, Actuarial Science and War Studies(!). So if that is what is holding you back, don’t let it!

Since most of the grads are currently loading up on caffeine and having chats over coffee with people from different parts of the Corporation to put the feelers out for where they may want to be come March, I thought now might be a good time to talk a bit about the work I’ve been doing here in Claims and what I’ve learned so far (with a view to helping me sort out in my head what I might want to gain from my next placement!)

So here is a short summary of the different kinds of projects I’ve been working on so far:

ECF Project

ECF (standing for Electronic Claims File… Lloyd’s forte, second only to insurance, is its incredible ability to fire out acronyms left right and centre) is the process that was put in place to bring the Claims market into the 21st century- making the move away from paper claims files to an electronic system.

On my second day in Claims, I sat in on a meeting concerning the functionality of ECF for a specific class of business. On my third day, I was given ownership of a project focused on conducting meetings with the market (which was great exposure), and ultimately constructing a report to respond to the queries raised in that initial meeting. Being given this level of responsibility so early on has been a steep learning curve, but something that really helped with getting stuck in from the very beginning.

CTP

Claims is one of Lloyd’s six key priorities and the Claims Transformation Pilot (or the CTP!) has been a central focus of the claims team throughout 2009, as the pilot was launched on 1st January 2010. You can read more about it here, but in a nutshell, it is a project focussed on trialling a change in claims processes within the market, with the aim of delivering a faster and more efficient service to clients, in turn building on the reputation of Lloyd’s for claims handling.

Medicare

As a result of a piece of legislation in the US, the Medicare Secondary Payer reporting (yes, you guessed it, ‘MSP’), the Lloyd’s market has been working on a project to determine how best to respond. The applicability of the legislation itself is pretty complex, and trying to get my head around it has taught me a lot about claims, as well as how the Market and the Corporation works together.

Claims Account Managers

The (fanfare please…) ‘CAM’, in their business as usual roles (i.e. outside of all of the above projects and many more that crop up on an ad hoc basis) are each responsible for the an allocated number of Managing Agents, ensuring they meet the Lloyd’s Claims Minimum Standards. Through this role, I’ve been able to see how claims processes work and vary between Managing Agents, reviewed and distributed performance reports, and had the opportunity to take part in many different discussions with the market.

This is only a snapshot of what I’ve been exposed to in the Claims team so far. The best thing in my opinion has been how outwards facing the role has been. This is something I will definitely be looking for in my next placement and will let you know how the search goes…

It is up to you how much or how little you get involved in outside of the underwriting/ claims/ projects that you work on day to day: it could be the lunch-time lectures put on by the CII in the Old Library, playing for Lloyd’s netball or football team (which can in fact link into your day job) or you could get involved in some of the Community Challenge opportunities on offer here.

A couple of weeks ago, Alexandra and I did just that. An email was sent round the Corporation asking for ‘eager volunteers to support Lloyd’s Community Programme (LCP) by helping young people in Tower Hamlets prepare for working life’.

Having volunteered in various forms and guises since school, this was something I was keen to keep up. Given that Lloyd’s allocates up to three days per year for employees to volunteer in the local community as volunteer leave, and the fact that this seemed like a project to which I would genuinely be able to contribute, I ‘eagerly’ signed up.

Lloyd’s Community Programme brings together the Corporation and the market to give them the opportunity to ‘put something back’ into the community and in 2009 achieved a target of 1000 volunteers. Set up in 1989, LCP is one of the longest running community schemes in the City of London, which says something for the history and the culture here at Lloyd’s.

The community challenge that I signed up for was the ‘Getting Ahead’ school workshop at a school no more than 10 minutes from the office in Tower Hamlets, which is a borough of London adjacent to the City, and is a stark comparison in terms of economic profile.

Arriving at 8.30 to the school, I began to get a little nervous about the prospect of waltzing into a hall full of 16 year olds and professing to know all about ‘employability’, having only been employed since September! But my nerves were misplaced and it turned out to be a really enjoyable day for all involved (even the students I hope!).

We took part in a series of workshops with smaller groups of students, from first impressions (they thought my role model would be Kiera Knightley, and Alexandra’s Katie Price…!), to CVs and group exercises. The day culminated in a business re-branding competition and the students presenting their concept, financials and designs to the rest of the hall – our group got special mention for the quality of the presentation, and I felt a lot like a proud parent!

There was a real range of abilities in the students, but they were all eager to be there and to learn, and the day also contributed towards one of their business qualifications.

It was a great experience – I think the students taking part all took something away from the day, and were all lively and engaging.

They had all been asked to dress as they would for an interview, and I think that the main thing that I learnt from the experience is that I am now hideously out of touch with the ‘youth of today’ as I had not realised that oversized ties and braces off the shoulder are the new ‘in’-style!

Lloyd’s has a really diverse range of opportunities such as this on offer if it is something that interests you and you want to get involved in. Through the day I met people who work at Lloyd’s that I otherwise would not have done, had a lot of fun getting to know and helping the students and also learnt a bit more about London and the area I am working in everyday.

The big one is of course your Chartered Institute of Insurance exams.  As part of the graduate programme, you work towards the middle level which is the Diploma in Insurance.  As part of the orientation week we got a 2 day crash course in the insurance basics, so by the time it came to our first exam (called the LLMIT in true Lloyd’s acronym style) we were budding experts on all things insurance and passed with flying colours (bit of a relief for me as my line manger helps write the LLMIT exam so I would have had to hide in the toilets for a few days if I failed!)  To be honest, some of the exams look a bit tough and the books look like doorstops.  However, these exams are considered the industry standard so whether or not you stay in the insurance industry, they will really help with your general career progression.  Plus there is always someone around who has done the exam before, so you get lots of help and support. 

Jennifer, our graduate co-ordinator, also organises lots of additional training for us: we have had a specific day dedicated to reinsurance; lots of revision sessions for our exams with external trainers; help with the financial aspects of insurance (as I mentioned in earlier blogs don’t worry you really do not need to have the maths ability of Stephen Hawkin); and a whole course on personal development.  Although some of the work on personal development can be a bit obvious, some aspects have been really helpful. For instance, it has been great to practice presenting to a group and then getting feedback on your style. I don’t know about you, but I used to really hate speaking in front of the class at school, so this is a great opportunity to build up my confidence. 

I have also booked myself on some IT training courses which are of course a great skill to develop.  Unlike some of the fellow grads, my Excel skills are pretty rusty – spreadsheets formulas fill me with dread.

The amount of alternative learning opportunities at Lloyd’s has really impressed me.  These past few months, I have attended several classes of business presentations organised by my directorate to help improve employees’ knowledge of different classes of business.  So far, we have covered aviation, property, marine and energy. 

Energy (which is a marine class of business) is generally quite a volatile book, and recent hurricanes such as Katrina and Wilma in 2005, and Ike and Gustav in 2008 caused substantial losses. 

There is always some kind of lunchtime seminar being organised at Lloyd’s that everyone is welcome to attend, such as training on information protection, a talk by Pen Hadow on the Catlin Arctic Survey or a talk on the Lloyd’s Claims Transformation Programme ( Jessica, a fellow grad will love the plug of her work here!).  A good example of the interesting talks you can go to is one later this month, entitled ‘Major sporting events: what happens when they go wrong’ – I’ll let you know what I learn…..

There has been a tangible lift in spirits in my team over the last month… perhaps it’s the inundation of Christmas Cards… or the prospect of the Christmas holidays… but my money is on the close of the business planning season being the key factor!

As I mentioned last time, the team have been kept busy over the last few months working towards approving a 2010 business plan for every syndicate in the Lloyd’s Market – no mean feat, with somewhere in the region of 78 syndicates under 50 managing agents to analyse and approve before mid November.

But why do they do this? What is the point? I’ll start at the beginning:

The Franchise Performance Directorate (FPD), of which Underwriting Performance (UP) is a team, was brought into existence in 2003 after several years of losses for Lloyd’s, culminating in the losses arising from the terrorist attack on the Twin Towers in 2001. This was the final straw that almost broke Lloyd’s financial back (that’s right, for the purpose of this analogy, Lloyd’s is a camel).

FPD was brought into existence “to create and maintain a commercial environment at Lloyd’s in which the long-term profitability is maximised for all investors”.

The Underwriting Performance team has played a vital role in the improving of business practices and continues to help the market manage the ‘underwriting cycle’ throughout the year. The team challenge the syndicates whenever their results indicate poor performance, and hold them to the Lloyd’s Minimum Underwriting Standards. The syndicate business plans are a key moment when the UP team can influence a syndicate’s risk appetite, so understandably the business planning season is a very busy time.

The planning process can be stressful therefore, as all the syndicates have differing opinions on the market trends and pricing or rate movements that may, or may not, happen in different classes of business at different times.
Some are new, wanting to grow, some old, and all with different pressures from investors with differing agendas and expectations (e.g. looking for fast returns on equity or maybe a longer term view, often in a privately owned syndicate, which is happier to see a smaller return one year, rather than growth for growths sake). All these factors need to be understood, weighed and balanced when dealing with each syndicate and of course can result in a wide range of different projections in the business plans submitted.

The team gets data from across the market, so that they can build a good picture of the market trends in any insurance class of business (e.g. marine, aviation, property etc.). The team then have to ‘push back’ on plans they believe to be unrealistic or unachievable in comparison to their information, and do so in a way that ensure consistency across the market, but does not ignore each syndicate’s unique make-up of business and general position.

As you might be able to tell, this is not a straightforward job, with a lot of grey areas to deal with! It’s been a fascinating place to spend my first few months in Insurance, I couldn’t have hoped for a better overview and introduction to some of the key driving factors of the Lloyd’s Market.

Anyway, the business plans are all approved now, so Christmas time brings a slightly slower pace to the desk, and everyone is enjoying getting into the festive spirit… I’m off to buy my Secret Santa, will see you in the New Year. Merry Christmas!

The current United Nations Climate Change Conference in Copenhagen has really brought the issue of climate change into the limelight. With nations attempting to reach agreements on how climate change is tackled globally, the anticipation of the outcome is one to be focused on.

Even our CEO, Richard Ward, had his say in Denmark. He talked about how insurance can play its part in helping mitigate the effects of climate change.

But what are we doing here at Lloyd’s to tackle climate change, after all it is everyone’s responsibility!

 The Lloyd’s 360 Risk Insight is one part, and deals with bringing together the views of the world’s leading business, academic and insurance experts. We provide companies with practical tools that can help them turn risk into opportunity. There is a very useful piece on climate change, looking at the impacts on the ground, and how we can adapt our way of life to help sustain the future of the planet.

The Corporation of Lloyd’s and many of the market players have also signed up to ClimateWise, which is a worldwide initiative driven by leading insurance companies to reduce the effects of climate change. The principles set out by ClimateWise help business incorporate climate change into their organisation.

The Emerging Risks team in which I currently work plays a large role in identifying risks that may not always be at the forefront of peoples minds. We are plugged into many research institutions and blog  on topics, such as climate change. There are very good links to research here, and would definitely recommend them for a read.

 Now if I have not given you enough to get your teeth stuck into surrounding climate change, feel free to get in touch, I am full of useful information on the topic!