It is truly amazing to me that after more than three centuries in business, virtually no one in this country outside of the insurance industry understands what Lloyd's of London really is, how it works, and what a critical role it plays in our economy. What can be done to change that? Must Lloyd's go so far as to launch a new reality TV show to educate the American public?
Lloyd's is trying to broaden awareness, but it's tough going because most "civilians"--those not part of the insurance industry--still think of Lloyd's as some exotic place where glamorous but essentially silly risks are placed, like some movie star's body parts.
Indeed, Chairman Peter Levene mentioned early on during an interview aired last night on the PBS program hosted by Charlie Rose, that Lloyd's recently covered "Ugly Betty's smile," referring to actress America Ferrera, star of the hit TV show.
That's why Lord Levene was with Charlie Rose in the first place--to publicize the fact that Lloyd's offers more than just coverage for a pretty face.
When I visited with Lloyd's in London last October, I was asked for advice on how Lloyd's might better communciate its place and value in the U.S. economy beyond the insurance press and general business media.
I immediatley thought of Charlie Rose, given the fact a Lloyd's official would get at least a half-hour, commercial-free, to make their case before a relatively small but fairly sophisticated American audience.
Sure enough, Lloyd's followed up on my suggestion and booked Lord Levene for an appearance while the chairman was in town for a gala dinner in New York City this week that drew a veritable "Who's Who" in the insurance industry. (For my report on the big news from that dinner, see my June 26 blog entry.)
The Chalie Rose appearance was a good start. (If you would like to view the full interview online, click here.) Still, it's clear Lloyd's has a long way to go.
Charlie asked Lord Levene right off what Lloyd's is, exactly. The chairman tried to put the market's impact on the U.S. economy into context statistically, but then Charlie quickly moved on to more generic economic topics. Insurance, as usual, became an afterthought.
So, what can Lloyd's do to get its message out to a blissfully ignorant American public?
Perhaps Lloyd's must adopt the only approach the dumbed-down American viewing public appears to pay attention to these days, by producing a new reality TV program!
Put together competing syndicates staffed by totally clueless Americans. Teach them (and through them, the tens of millions of viewers the program will draw) exactly how Lloyd's works. Then let them loose and pit them against one another in a contest to see who can underwrite risks most profitably!
If you need a British-American pop icon to bridge the cultural gap, have Simon Cowell of "American Idol" infamy host it!
This would be a bit of a throwback to the days when Lloyd's was financed primarily by individual investors (those "Names" who are now an endangered species), rather than today's dominance by corporate capital.
Anyone who suspects such a program could not possibly be entertaining has obviously never sat "in the box" with a real-life underwriter at Lloyd's, as I had the pleasure of doing over a decade ago. I sat by the underwriter's side as he casually signed on for pieces of exposures totalling tens of millions--ranging from earthquake risks facing office complexes in Tokyo, to private school buildings concerned about civil unrest in South Africa.
The gentleman with the underwriting stamp took great glee in teasing the brokers who stopped by to shop their risks that day, introducing me as his shrink, on hand to observe first hand why his blood pressure was so high, his heartburn so chronic, and his personality so manic. Too bad there were no TV cameras there to record it!
All kidding aside, it's terrible that Lloyd's is not only so misunderstood in this country (quick, how many "civilians" would realize that Lloyd's is a market, not an insurance company?), but that it is so unappreciated.
At the dinner on Wednesday, New York Gov. David Paterson noted in his speech that New York City would have been up the creek after Sept. 11, had Lloyd's not coughed up over $11 billion in insurance claims. He also pointed out that Lloyd's is covering many of the reconstruction projects on the World Trade Center site today.
But who else outside of the governor and the insured parties knows about this?
What do you folks think?
Comments (2)
Why does the blissfully ignorant American public need to know ANYTHING at all about Lloyd's of London? Is Lloyd's thinking about getting into the direct retail Personal Auto and Homeowners business?
SAM RESPONDS:
It would be nice if this xenophoboic nation understood how interconnected our global economy has become.
We depend on China to finance our public debt by buying Treasury bonds. We depend on foreign Soverign Wealth Funds filled with our petro-dollars to bail out our ailing banks and investment banks, and yes, we depend on foreign reinsurance and surplus lines capacity from Lloyd's and others to keep our insurance market stable and healthy.
Such knowledge might impact public policymaking, as when state insurance regulators place unreasonable collateral rules on solid foreign reinsurers simply because they are from outside the country, as well as on Congress in considering national standards for reinsurance and surplus lines regulation.
MIKK HAS THE LAST WORD:
If you're dreaming about a crowd of just-us-folks gathering in front of the state insurance department's offices to protest about the commissioner's collateral rules on foreign reinsurers.... well, you're dreaming. Maybe a few surplus lines brokers could be induced show up, but they already know about Lloyd's.
Posted by Mikk | June 30, 2008 11:19 AM
Posted on June 30, 2008 11:19
While it is undeniable that the world is financially interconnected and becoming more so, invoking the word “global” does not automaticaly make something good.
The laissez-faire zealots who currently populate the Treasury Department appear to believe that, as least as far as the insurance industry is concerned, the mere existence of a global insurance marketplace means that it must take precedence over our domestic insurance marketplace.
Speak up for insurance consumers on Main Street USA, and you risk getting accused by this crowd of being parochial or antiquated.
The fact that the United States has the world’s most successful insurance industry is beside the point to them, when there’s additional money to be made by a handful of major players.
The “big boys” who are pushing for federal regulation of insurance--along with their ideological acolyites at Treasury, who never met a regulation they didn’t want to abolish--appear to believe that having so many insurance companies (not to mention all those pesky independent insurance agents), just gets in the way of their greater success.
Funny, I thought America’s success was based upon vibrant, robust competition in a free and open marketplace with many competitors.
And isn’t it just a bit unseemly for the United States to be going around the world, hat in hand, attempting to get Soverign Wealth Funds to bail out our banks and securities firms that made serious miscalculations leading to the subprime crisis?
Simplifying the lives of insurance people in the U.K. and Europe, while a nice gesture, should not be the top policy priority of the United States. It should not take precedence over ensuring that our domestic U.S. insurance market, comprised of carriers of all sizes, remains robust and successful.
After all, the subprime crisis occurred in the banking and securities sectors, under federal regulation.
The insurance industry, regulated by the states, remains strong due to prudent practices. That alone should kill all the talk about the Optional Federal Charter.
Posted by Ted Besesparis | July 2, 2008 12:14 PM
Posted on July 2, 2008 12:14