Not long after he had assumed the chairmanship of Lloyd's in 2002, I asked Lord Peter Levene, "What is the biggest challenge you face?" We were in his glass-walled office in the extraordinary and disconcerting Lloyd's building in London.
"I'll show you," he said, rising to his feet. He led me to the wall behind him and pointed through it and down about 60 feet into the Blade Runner-ish atrium. In an office, at his desk, his back to the glass wall, sat an underwriter.
To his left and right, ahead of him and behind, were giant stacks of boxes containing paperwork. An Englishman's home is his castle, and this fellow's fortress was fabricated of files.
Lord Levene didn't say a word. He didn't need to. The image he had presented was more eloquent than words: It was the insurance industry, drowning in paper.
No doubt the coverage of complicated risk requires an absurd quantity of documentation. No doubt writing the business must be 100 percent more exciting than writing it up. And no doubt getting the paperwork in order makes all the difference between corporate survival and the scrap heap.
But, honestly. Here we are, Buck Rogers in the 21st century, and insurance still kills more trees than any blight ever could. And I'd wager that not much of the paper, once printed, filed and stored, is ever read again.
The paper problem is a branch of a larger anachronism that dogs the industry's progress. Insurance and reinsurance is in many areas unreservedly Luddite, trapped in the days before computers changed the face of the world for the rest of us.
The embrace of technology is so alien to certain corners of the industry that the very computers on which it does not process much of its data are often older than the employees operating them. I well recall visiting a large broker's office not so long ago--this century--and finding Windows 3.1 still in use. I kid you not. "Ah, but we have lots of offices," the manager said, "so it would be quite costly to keep up to speed on technology."
Anachronistic, of course, need not mean bad, or lacking in competence. The generation now at the top was born and bred in another time, and has retained its values into the modern day. A man's word, in the everyday sense, remains his bond at the most senior level. That might sound na´ve, but I believe it to be true from close observation of the people I have met. They are not all saints. Some are utter swine, and being human, all are flawed. But if consistency is the last refuge of a scoundrel, it is possible that insurance remains the last refuge of a gentleman.
In so many ways the insurance industry is behind the times. Quite a few of its male practitioners still wear ties, for instance. At conferences, some even wear blazers, sport jackets and the like.
In Europe, in Bermuda and increasingly elsewhere, the dictates of fashion have consigned that kind of clothing to the margins, where powdered wigs and shoes with giant gold buckles now live. Get with it, insurers. Only beachwear, regardless of the climate, says you know what you're doing in the new world order.
Speaking of lower standards, Bono is now the chief global debt officer and Bob Geldof runs economic policy. That their haircuts are their only qualifications apparently has no relevance. It's the modern way. So why aren't Britney Spears and the Artist Formerly Known as Prince running insurance companies?
Which brings us to the greatest anachronism of all. In a world where business is taking the place of religion, insurance is still regarded as the devil's work. Unlike private equity or the hedge fund boys, insurance isn't just unfashionable for a season; it is permanently passÚ.
Tell someone you work in insurance, and they might well stick a finger down their throat. In Bulworth, Warren Beatty's film on the nature of truth, the worst guy in a movie full of drug dealers, corrupt politicians and gun-toting schoolchildren ... runs an insurance company.
It's time for an overhaul. You have nothing to lose but your frock coats.
ROGER CROMBIE is a Bermuda-based columnist for Risk
ALSO: READ THE OTHER PARTS TO THE INNOVATION SHOWCASE ISSUE.
September 15, 2007
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