As Lloyd’s moves to modernise and transform its marketplace, one of the most exciting potential developments could be creating a mechanism whereby investors could invest on a shorter and more flexible basis, Vicky Carter, deputy chair of Lloyd’s and chair, global capital solutions, international, at Guy Carpenter, told Monte Carlo Today.

Such a move would be limited to specific types of capital writing specific short-tail risks and would potentially leverage London Bridge, the ILS structure the market created in 2021 to allow alternative investors to deploy capital in the market. More recently, London Bridge 2, a second protected cell company, was established to offer broader permissions for ILS business and give greater flexibility to the market and investors.

“One of the areas where it would be great to see further development is around the flexibility of capital solutions at Lloyd’s,” said Carter. “The creation of the London Bridge facility and more recently London Bridge 2 continue to enhance the appeal of the market to investors, but by looking at ways which would allow for capital to be released earlier, potentially subject to no losses. This would be hugely attractive to potential investors.

“Burkhardt Keese, CFO of Lloyd’s, is constantly reviewing ways to attract alternative capital to Lloyd’s and measures that boost the market’s appeal to investors.”

Carter is keen to stress that any such arrangement would be limited to certain types of investors and certain types of risks, but she is an advocate of modernising Lloyd’s. Such a move is just one of several innovations she is championing.

She would like to see further development carried out by the Lloyd’s Lab, the market’s accelerator programme for insurtechs conceived with the purpose of driving innovation in the market. Eleven insurtechs have been selected to join the eighth cohort of the Lloyd’s Lab.

These firms were selected based on solutions geared towards four key themes: decarbonisation and climate change; supply chains; data and models; and claims.

“The success of Lloyd’s Lab has been phenomenal; some fantastic innovations have emerged from it, some of which deliver huge societal benefit,” Carter said. “A lot more can still be done. Now the eighth cohort is underway, I hope the lab goes to a new level. To me that is a huge area of excitement.”

A big step forward

To Carter, a key part of Lloyd’s journey towards modernisation is embodied in its move towards a more diverse market. She became the first female deputy chair in the market’s 334-year history when she was appointed. She acknowledges the importance of the moment and is a champion of further moves towards diversity.

She describes her appointment to deputy chair of Lloyd’s as a significant step forward for the market. “It proves there are no barriers now; anyone can get to the top if they put their mind to it and they work hard.

“Lloyd’s has been a very big part of my life. To sit in this position now and to support the strongest executive team I’ve ever seen at Lloyd is a huge honour.”

Carter is focused on driving further diversification in terms of the talent the market attracts. “I like to bring very varied talent in with different types of skillsets and the market has been very positive about that. That will become more important in the future as this business evolves. Lloyd’s is an incredible institution.

“If you consider how the world has changed in the 330-odd years it has been going, Lloyd’s has always evolved and kept pace. It’s remarkable, but it’s now up to the leaders in the market to help it continue to evolve as the world changes and becomes more complex.”

She flags up some of the progress Lloyd’s has made around digitisation and the difference this will make to the market. “It will make Lloyd’s a much better, faster, cheaper marketplace, and that is very important to its future.

“It’s the centre of the industry and the last true face-to-face trading market. Given all the positives, its platform in terms of the licences, and a totally unique capital structure, there is a huge amount of confidence now that Lloyd is an exciting place to be.”

Swapping hats and commenting in the context of her role at Guy Carpenter, Carter says that the reinsurance sector is facing many challenges—but this is also a time when brokers can shine and prove their worth to clients.

“Yes, there are many challenges from inflation to the geopolitical landscape to cyber risks to climate change. But there’s a lot of positives out there, a lot of new product offerings, which is exciting. There’s the fast and furious development of analytical capabilities, the application of new technologies. And a very strong capital position in the market. For me, it’s a great time to be on the underwriting side,” she said.

For a broker, she says the role is to help clients understand those challenges and find solutions. “In an ever more complex world, we have to help our clients understand the changing nature of risk, from an analytical point of view and in terms of product development. We need to help them adjust their risk tolerances.

“There is no one size that fits all. Solutions have to be bespoke to the client. The more you understand your client’s portfolio, the more you can tailor the solutions to them.”

She believes that this skillset is more important than ever in a hard market. “My view is that you can do anything in the soft market. You produce real value when you’re in a hard market. That is when you can really shine. It’s probably one of the most exciting times we’ve seen and there are great opportunities out there.

“We have a very positive attitude; we are in an exciting time in terms of the rating environment. It’s all about risk selection in what is a very complex environment. But complexity equals opportunity. This is the time to take those opportunities,” she concluded.