The quiet season is about half over. The time between Nov. 30 and June 1 is usually quiet in the tropics. The six months between June and November is hurricane season in the Atlantic Ocean. And the last few seasons have been reminders about the threats posed to Florida.
Hurricane Matthew skirted the east coast. Irma barreled into the Lower Keys. Michael devastated parts of the Panhandle and Dorian came less than 100 miles offshore of Palm Beach County before veering away. Each of these were category 5 storms, causing billions of dollars of damage in Florida, and billions more elsewhere.
The company headed by John Neal is responsible for finding insurance taking on a lot of that risk. He is the CEO at Lloyd’s of London.
The company may be known for insuring some unusual things, like Bruce Springsteen’s voice, soccer star David Beckham’s legs and actress America Ferrera’s smile. But Lloyd’s of London doesn’t insure any of it. Lloyd’s is the place where the risk gets a price.
It isn’t an insurance company. It is a global insurance marketplace — a huge one. Five percent of all the commercial insurance, and insurance for insurance, in the world was handled through Lloyd’s in 2018. It has a quarter of the market for higher risk insurance and re-insurance like for storms and floods in Florida.
And the nature of the risk is changing.
"When I first started in insurance, it was very tangible," said Neal during a recent stop in Miami. "'Will you insure my factory? Will you insure the people that work in that factory?' Today, people are saying, 'Can you insure my reputation? Can you ensure my data?' Risk is changing."
Even while a big change is the increasing recognition of the risk of climate change, it is weather, especially hurricanes, that remain the most pressing risk.
"We try and look at the patterns we would see," Neal said. "We try and look at the scientific evidence around the changing climate and try and plot what we think that will do to weather next year and in two years time. Our immediate horizon thing is around weather more than climate. But we would turn around and say as an industry, we've got a lot of weather data and that weather data ought to be helpful in informing the climate conversation."
At least a quarter of the world's commercial property insurance and reinsurance is negotiated and priced at Lloyd's according to Neal. That gives the company a unique view at how weather risk, and resilient efforts, are priced in different locations across the globe. Neal said Lloyd's is thinking about making such information anonymous and then releasing it public. "Then people can really understand what exposures look like and what the real threat is for them."
Risk is getting more expensive. U.S. commercial insurance rates were up more than 4% in the third quarter of 2019 compared to a year earlier according to Willis Watson Towers, an insurance brokerage. It marked the highest annual jump in more than five years. Neal thinks insurance prices will continue going up for about two more years.
Of course, that's dependent upon the weather more than climate risk right now, said Neal. "About a third of the world's (insurance) premium is property. And the significant exposure there is really weather-related." If property insurance premiums are going up, Neal attributed that to "largely weather that's dirving that price."
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