Tradition and Technology, Both

Ed Gaze joined Lloyd’s in August 2018 after ten years as a consultant at KPMG and EY specializing in technology and data. The episode opened with Ed remembering Gilad turning up at Lloyd’s in jeans and a T-shirt, inappropriate for the building’s strict dress code. The rules had in fact been relaxed shortly before the lab opened, by the then CEO; before that you had to wear a blazer to enter the underwriting room.

About Ed Gaze

Ed Gaze works at Lloyd’s Lab, the innovation program of Lloyd’s of London, where he has been since 2018. Ed lives in the City of London, in a small flat where he took up piano as a lockdown hobby.

How Lloyd’s Actually Works

Ed explained that Lloyd’s of London is a marketplace, not an insurance company, created by an act of Parliament rather than as a limited or public company, and it provides services to insurers in the market, including the ability to write business in different countries.

• Syndicates: a group of people with money to invest come together and put it in a pot, creating a syndicate (numbered, like “syndicate 1738”) with an aim, for example insuring marine hull risks.
• Managing agents: a syndicate hires a managing agent, an insurer such as Hiscox or Beazley, to run the business on its behalf. About 55 managing agents run syndicates at Lloyd’s, and it is a many-to-many relationship, since investors can back several syndicates and agents can run several.
• Boxes and brokers: each managing agent has a box in the Lloyd’s building, where underwriters sit, and a broker walks in with a binder of information on a risk, has a conversation, may do a deal, and goes to the next box until the risk is fully covered. A broker with a $100 million risk might get 20 million from the first underwriter and keep going. Some syndicates are “follow only,” not leading but following once a reputable underwriter has started, and Ed mentioned Ki, from Brit, the first automated insurer, which is a follow-only syndicate.

Competing managing agents also collaborate, as the broker builds a panel. Ed said the City’s EC3 postcode is almost entirely insurance, so you can walk from the Lloyd’s building to dozens of insurers and brokers in five minutes.

The iPad Legend and the Bionic Underwriter

Gilad raised the story that an early digital project gave iPads to brokers and they ended up stacked outside a pub. Ed had heard the story too, from before he joined, and said it shows good technology implemented poorly: a binder full of notes you can write on is useful, while a read-only device without a pencil is a barrier, and the take-up would be better if not imposed.

He likes Lloyd’s traditions (it insured the Titanic, and working there means you can see how people operated 100 years ago), and sees no conflict with technology. His vision for five years out is a “bionic underwriter”: someone fully equipped with the best information at their desk, with video calls, still having valuable face-to-face conversations with brokers about complex risks, where trust gets built, but without needing a tie.

What the Lab Is Doing

Ed was clear that the lab isn’t going to be a game changer for the whole market, and none of its startups is disrupting insurance. It is bringing in bits of technology, changing the culture, and showing that insurtech can add value. Examples:

• A startup creating parametric products launched a cloud downtime product in 2020, and then Google Cloud fell over in December, exactly what it was set up to insure. That is a brand-new type of product created in the lab.
• A company using satellite imagery to measure land subsidence to a resolution of one millimeter, refreshed weekly, looking at trends in infrastructure such as dams.
• An AI company, Optalitix, which dealt with spreadsheet complexity and put models on the cloud so that people in Lloyd’s and managing agents can share models in a governed way.

Because the lab is a service to the market, its value depends on managing agents’ engagement, and mentors are, Ed said, the most valuable part: more than 100 mentors so far, and about 60 in the most recent cohort. Several commercial deals have come from teams that met and worked together in the lab. Whether it’s an accelerator, incubator or lab doesn’t matter to him, though he leans toward accelerator because of the feedback speed participants describe.

Going Virtual

Moving online was smoother than expected: mentor meetings went well because everyone went from Zoom to Zoom and turned up on time, and engagement was strong. What was lost was serendipity: people walking into the lab space, such as brokers, underwriters and regulators, and Ed making connections to startups, along with lunch-and-learns and the community the startups built when they were co-located. Startups sharing space helped each other, and he noted that one startup, hyperexponential, set up a community with other insurtechs it met in the lab. He expects it to come back in 2021. The famous lab coffee machine, with its iPad, used to attract a lot of people.

Cohort Six

Cohort six would run in spring and summer 2021, probably remotely, with applications closing on the 22nd. It has four themes:

1. Data and models: new data sources and ways of modeling.
2. Geopolitics: new for this cohort and tricky, covering political risk, trade and travel disruption, or tools that help underwriters and claims teams.
3. Climate change and decarbonisation: planned for the prior year but delayed by COVID.
4. Claims: working with the future Lloyd’s claims team.

Advice: Endurance

Ed’s lockdown routine is bodyweight workouts, a barbell with slow squats until he squeals, piano and Netflix. The best book he read during lockdown was Endurance, about Ernest Shackleton’s doomed Antarctic expedition, which he found inspiring for its resilience. Gilad recommended an audiobook on the Cambridge Analytica story, and the two shared opinions on Maltesers.

Key Takeaways

• Lloyd’s is a marketplace of syndicates run by about 55 managing agents, where brokers walk risks from box to box and some syndicates only follow.
• Ed pictures a “bionic underwriter” equipped with the best data and still having relationship-building conversations with brokers.
• The lab changes culture bit by bit rather than disrupting the market; examples include parametric cloud downtime cover and satellite subsidence measurement.
• More than 100 mentors from the market have supported the lab, and its value depends on managing agents engaging.
• Virtual mentor meetings worked well, but the lab lost serendipitous encounters.
• Cohort six themes: data and models, geopolitics, climate and decarbonisation, and claims.