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Wednesday, Oct 01, 2025

Lloyd's of London seeks 'culture change' at the 333-year-old firm

Lloyd's of London seeks 'culture change' at the 333-year-old firm

It has not been an easy year for Lloyd's of London. The insurance market will publish the findings of a "culture survey" next week following claims of widespread sexual harassment.

The 333-year old insurance market - traditionally regarded as one of the three pillars of the City alongside the Bank of England and the London Stock Exchange - was rocked in March by allegations of widespread sexual harassment.

John Neal, who became chief executive just under a year ago, immediately announced that Lloyd's would aim to stamp out "inappropriate behaviour" and to reshape its culture in order that bright young talent would not be deterred from working in the market.

Central to that was a market-wide "culture survey", the findings of which will be published next week, the conclusions of which are likely to be developed into measures aimed at improving the diversity and inclusivity of a market viewed by many in the Square Mile as something of a boy's club.

The scandal, however, does not appear to have dented the market's financial performance.

On Wednesday, Lloyd's reported half-year pre-tax profits of £2.3bn, easily its best performance during the first half in five years, which was up from £588m for the first half of 2018.

That was despite the fact that claims were up 17% on the same period a year ago.

The big jump in profits reflected a strong performance on the investments that the market holds to cover insurance pay-outs.

In particular, Mr Neal said, there had been a strong performance from US government bonds and, to a lesser extent, UK government gilts.

Less positively, the contribution to profits from underwriting, the market's core activity, came in at just £100m, down from £500m in the same period last year.

Those underwriting profits might have been wiped out altogether had catastrophe losses on some lines of insurance during the period not been lower than in the same six months last year.

However, Mr Neal was keen to point out to other areas of improvement, notably a reduction in costs.

Inga Beale, his predecessor, was frequently frustrated by the reluctance of some syndicates to embrace technology more widely and move away from traditional paperwork.

Yet Mr Neal told Sky News that he had been "really encouraged" by progress being made in modernising the way the market operates.

He said members had also shown greater "discipline" in the policies they were underwriting, leading to a rise in average written premiums of 3.9%, the first meaningful increase in a number of years.

But he insisted: "We haven't stopped writing any business, we've not stopped writing any class of business, we've just required our underwriters to be a lot more disciplined around the risk they accept and the price they charge for that risk.

"So on a like-for-like basis, volumes are down 6.5%...that's been our requirement - let's just make sure that we're getting an appropriate return for the capital that we're putting at risk.

"In our experience, customers want to be related to successful and profitable businesses, so there is a correlation between running a good business and meeting the obligations to and expectations of our customers."

Hurricane Dorian fell outside the reporting period but Mr Neal said Lloyd's was already getting an idea of the magnitude of pay-outs it might face as a result.

He said: "We set aside roughly 10% of the premiums we collect to pay for this type of loss - that's about $4bn a year - and Dorian is well within those allowances.

"Our real focus at the moment is dealing with those that have suffered as a result of the hurricane, particularly in the Bahamas, so we're dealing with government and individual policy holders just trying to help them get back on their feet.

"Claims are already being paid out. We've been in touch with government to make sure our first response units are on the ground doing the job you want them to do - and that's really part of our belief in the future, you know, how can we improve the life-cycle of the payment of a claim and get people set up to continue their lives or to run their businesses as they possibly can after a disaster."

Mr Neal said he was confident that the work the market was doing on cultural issues would have a positive effect.

The market, which previously had a reputation in the City for booziness, has already banned drinking at work and in May it asked the Banking Standards Board to survey its 45,000 participants.

They were questioned about issues such as whether they would be comfortable reporting problems to their superiors and whether they had witnesses bullying or discrimination in the workplace.

Mr Neal told Sky News: "We were shattered, honestly, by the revelations in March and took them extremely seriously and accept them.

"We commissioned, as you know, the largest ever cultural survey that's been undertaken in insurance in the UK. Those survey results, sadly, validate the challenges that were put in front of us.

"I think that's what we expected, so next week, we'll be communicating the actions we are planning to take and those will be measurable, quantifiable actions to set the pulse of the market and improve the culture.

"It's not going to be a quick fix, it's going to take us time to do this, but we're absolutely determined to tackle cultural challenge as much as we do performance."

In the interim report published on Wednesday, Mr Neal described this as a "once in a generation opportunity" for the Lloyd's market and a time to "show leadership on the three key fronts of performance, strategy and culture".

These are not optional.

After the allegations in March, the Lloyd's management was told by the Financial Conduct Authority and the Bank of England's Prudential Regulation Authority to show demonstrable progress in how it deals with harassment.

It would be no surprise to hear, at next week's update, that some individuals have been hit with lifetime bans from the market.

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