How Lloyd's responds to changes in the business environment
A Lloyd's of London case study

Below is a list of Business Case Studies case studies organised alphabetically by company. To view more companies, please choose a letter from the list below.

Page 3: Key challenges facing-the Lloyd's market

Businesses that are keen to track changes taking place in their business environment may use a PESTLE analysis. PESTLE is an analytical tool that can help organisations to create a strategy for risk management. It does this by classifying risks into different categories. The following illustrates how a PESTLE analysis can be developed.

P - POLITICAL RISK

War and the threat of terrorism.

IMPLICATION FOR INSURANCE INDUSTRY

Since 9/11 companies have found it difficult to find comprehensive insurance cover for any form of political violence, especially those operating in emerging markets.

HOW LLOYD'S HAS ADDRESSED THE CHALLENGE

Lloyd's syndicates teamed up to offer multinational companies terrorism and political violence insurance.

E - ECONOMIC RISK

Rising house prices mean people are borrowing larger multiples of their income to buy their homes.

IMPLICATION FOR INSURANCE INDUSTRY

People are keen to protect their biggest investment (their home) from falling in value due to unforeseen circumstances such as noisy neighbours, derelict properties next door and even lengthy building work.

HOW LLOYD'S HAS ADDRESSED THE CHALLENGE

A Lloyd's syndicate launched a Home Value Protection policy to provide cover should their home reduce in value because of the unforeseen factors mentioned. This unique policy was the first new solution to enter the household insurance market in a generation.

S - SOCIAL RISK

The nanny profession has grown in size considerably due to the increase in both parents working.

IMPLICATION FOR INSURANCE INDUSTRY

Changes in legislation and public awareness campaigns make sure children are given a greater level of protection - but what about nannies - how are they protected if something goes wrong?

HOW LLOYD'S HAS ADDRESSED THE CHALLENGE

A new insurance product entitled 'Nannycare' launched by a Lloyd's syndicate offers Nannies protection against liability claims, for example if there was an accident involving a child, injury and property loss or damage.

T - TECHNOLOGICAL RISK

Today's reliance on computers and technology means that companies now face new types of risk. Putting the effects of a virus or hacker right is costly and more and more companies want to insure against the risk of things going wrong. The 'e-risk' market is projected to generate premiums of $2.5 billion annually by 2005.

IMPLICATION FOR INSURANCE INDUSTRY

All businesses need to insure against their systems 'crashing' and losing data, or against being the victims of industrial espionage carried out by hackers.

HOW LLOYD'S HAS ADDRESSED THE CHALLENGE

Underwriting agency, 'Click for Cover', has launched Club Esurance, a worldwide product offering small and medium-sized businesses cover for cyberliability.

L - LEGAL RISK

There is strong evidence that a compensation culture is growing in the UK. Actuaries predict that this will cost UK organisations £10 billion in 2004 - and will continue to rise at a rate of 15% per annum.

IMPLICATION FOR INSURANCE INDUSTRY

This increase in litigation means that it becomes more risky and expensive for insurers to offer cover.

HOW LLOYD'S HAS ADDRESSED THE CHALLENGE

The effect of spiralling litigation costs are felt across industries and country borders. Legal reform is one of the main things that will solve the problem, something that is beyond the remit of a single company. Lloyd's is lobbying for legislative change to address this problem.

E - ENVIRONMENTAL RISK

Global warming.

IMPLICATION FOR INSURANCE INDUSTRY

Changing weather patterns are making the Earth a more hazardous planet and are adversely affecting both people and property. Climate change affects property insurance because, for example, it increases the frequency and severity of highly destructive weather events.

HOW LLOYD'S HAS ADDRESSED THE CHALLENGE

The market is funding research, in an effort to understand exactly what is happening and how underwriters might best prepare to face challenges ahead. Not everything is doom and gloom. Improved weather forecasting means, for example, that ships can take avoiding action and reduce the risks to themselves. UK citizens with homes on flood plains, however, face much higher insurance premiums and, in some cases, the prospect of being unable to buy property insurance cover.

Lloyd's of London | How Lloyd's responds to changes in the business environment
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