The Intelligent Quarterly from the publishers of The Insurance Insider

Summer 2013

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Dear friend,

Sometimes we gaze out on this wild and wonderful world of risk and find it amazing that anyone in our business should be sufficiently prescient or have a worldview robust enough to formulate anything approaching a strategy.

Most of the time we wonder whether all strategies are borne of a heady brew of one part arrogance and three parts ignorance.

Tie a random CEO to a chair, inject him with truth serum and ask him what his Chilean strategy was and you are unlikely to get a sensible answer.

Now change the subject to New Zealand quakes one, two and three. Then throw in some Deepwater, Gryphon and Japan and, by the time you get to the Thai floods, you'll be thinking you have a double agent or saboteur in your midst. Either that, or there wasn't much in the way of strategic thinking going on.

Who knew of the major fac exposures in Chile? Who'd have thought Christchurch and its liquefaction would be a "big one" when Auckland was supposed to be the mega risk? Who could have imagined that it would be the Japanese nuclear industry that was so poorly protected against known perils? And who noticed that Thailand had suddenly become a major global manufacturing hub with huge industrial parks along its famously flood-prone rivers?

And while this heady brew is swirling, London, the US and Europe go to Bermuda; Bermuda goes to Ireland and Switzerland; London goes to Switzerland; and Switzerland goes everywhere.

Everyone goes to Singapore, the Middle East and Latin America; India comes to London; China comes to London; everyone else waits to get into China and India; and just lately, the Middle East is going to Switzerland.

Everybody needs a plan, or likes to be seen to have one. Hence the latest iterations at Lloyd's and the splendid Vision 2025, which was unveiled with great fanfare and prime ministerial support since we last met on these pages.

Back when it used to be pretty much the only club of any note in town, Lloyd's didn't really need a plan. If losses were bad the capacity dried up, prices rose, more capital came in and that was that. But today's global capital is as hard to catch as an alley cat.

To make the new global strategy work, one not only has to become adept at herding dancing cats, one also has to keep the gamblers, troublemakers and general undesirables out, which is often easier said than done.

Tom Bolt and his team of bouncers will have their work cut out.

And what of the eager punters who are just coming to learn a few twinkle-toed steps before heading home to start a dance academy of their own? They are far harder to spot.

Perhaps through a combination of charm and sheer critical mass they can be turned and made to stay? After all, Lloyd's has seen off the Paris market and the Scandinavians, as well as exchanges in New York, Chicago and Miami in its time.

Perhaps this newfound desire to keep one's friends close and one's potential enemies closer will be proven wise over time.

Whatever their eventual success or otherwise, it is a human necessity to make plans. It is always nice to have an idea of where you would like to go, but wishful thinking to imagine that you will ever get there.

It is more wishful still to think you'll be happy if, against all odds, you do actually arrive at your planned destination.

The only insurance beatitude worth knowing is that while you can't guarantee success, you can sure as hell deserve it.

And while us cynics love to mock the grandeur of "the grand plan", we would have to agree that the lofty global aspiration - coupled with the incremental reforms and improvements that it has planned - mean that London has probably never been more deserving of success than at any point in our professional lifetimes.

That really is a plan worth hanging on to.

Mark Geoghegan,

Editor