Maximising Opportunities
The former chairman of Lloyd's has a long track record in business with a background steeped in tradition but he's a firm believer in modernisation
By Samera Owusu Tutu
Our meeting is in a fitting spot — a discreet corner of the Lloyd's cafe. Though there is nothing discreet about Max Taylor, former chairman of Lloyd's. His height catches me off guard, but is well-placed in the lofty Lloyd's building.
I'm here to talk about the man. The man who climbed from the Lloyd's floor to its highest table in the chairman's seat. The man who helped Lloyd's weather one of the darkest periods in its history. The man who remains a force to be reckoned with in the London market and around the globe.
Though notably self-deprecating, Max cannot play down this level of success and his colourful career.
His entry into the industry was less than conventional. As a young man, he had ambitions to see the world; while it was (re)insurance that ultimately afforded him the opportunity to do so, this profession was not part of his initial plan.
"I started university, but I didn't see any point spending three years studying electronic engineering when I had no intention of becoming an electronic engineer. So I left early and came to London. I bumped into some old friends from school who had a rock'n'roll band and I played guitar in the band. I still play.
"We formed a company that managed this band and several other groups. I probably could have stuck with it — who knows what would have happened — but I decided to get married. My wife was 21 at the time and I was 22, and I came to the conclusion that actually what I wanted to do was settle down and get what I loosely termed at the time as 'a proper job'."
"The proportion of the population that went to university in the 1970s was relatively small. In those days the graduates were the exception to the rule, and while the companies would obviously take on the graduates, they were more than happy to recruit people out of school," he adds.
Max managed to land interviews and job offers from a number of different firms, including Willis through his wife's father, who was involved with the firm. He started with Willis Faber & Dumas in 1970.
"I was employed in the aviation division, which was a really very successful operation at Willis with some really good people in it. On my first day, I was attached to a broker, who actually became and still is a very good friend. He was told to take me around the market. Within 24 hours I was walking around Lloyd's, and within a couple of weeks I was walking into the syndicates."
"There were some really clever people in the offices. I used to be a real nuisance back then, and asked them all sorts of questions. You learned the technical side from the technical people, and how to find your way around the market from the market people. You might say ‘where was the training, the education?' but that's the way it was."
"I did 28 years at Willis, that was my man and boy moment. I did stints in Japan and America, took over the reinsurance operations, took over what was then the major principle broking company — Faber Dumas Ltd — and ended up with the senior management team at Willis."
While many would deem three-decade stint at Willis a worthy career, Max was just gearing up to move on to the next phase in his journey. His no-quitting attitude may have been activated early on in life, with the loss of his parents.
"My parents died when I was a teenager so I was brought up by a very nice uncle and aunt who were my guardians."
The oldest of his siblings, Max had to step up and take charge at an early age. "You just get on with it. You're almost forced into becoming very self-dependent and responsible. People say you seemed to have risen to the challenge, but you don't think of it that way, you just got on with it," he says.
"I understand there are statistics that say that a lot of people who end up in senior positions lost a parent or both parents at some early stage in their life, and I understand why. It just gives you that sense of ‘I've got to get on with it'."
In 1998, after 28 years at Willis, Max found himself in conversation with Lloyd's for the position of chairman.
Max joined Lloyd's in 1998 — two years after Reconstruction and Renewal (R&R), which put the Lloyd's book of business for the open years of 1992 and prior in a run-off company called Equitas to ensure Lloyd's remained profitable.
"The core of the deal had been done, but there were massive loose ends around it. The Lloyd's reputation had been quite severely damaged in certain parts of the world, and there were stresses and strains with regulators."
This mainly would have been the US region, which was heavily impacted by the run-off of the open years of pre-1993, and whose regulator would have had a firm eye on the formation and operation of Equitas.
"There were people who felt they had not been properly treated throughout the process. Also, the press was very interested in what was going on at Lloyd's, so if the telephone rang at 10pm on Saturday night, you never quite knew if it was going to be somebody telling you what's going to be in the Sunday papers. The primary objective was to re-establish the Lloyd's reputation in the global markets. The big elephant in the room was how to do it.
"It was really a question of spending a very considerable amount of time visiting and talking to people, and making sure that we met with targeted local regulators, key senior people and the local (re)insurance sectors around the world. We had to demonstrate that Lloyd's had gone through this traumatic period, come out the other side strong and competitive, and still remained the leading commercial (re)insurance market in the world. We were out there to tell the world we were back in business in a big way, and that was what we did."
Visibility was also paramount to Max while at home. If asked to meet a client by a broker Max would always try and make time.
"I took the view that being approachable was very important. I would always make time to see Lloyd's customers or potential customers. I felt that that was a very important part of the process, to meet with people in the market."
The post-R&R period was tumultuous for Lloyd's and Max, with others, shouldered this and helped to steer it out of troubled waters. Having led the charge in the aftermath of the formation of R&R, Max is all too aware of the challenges the current leaders of Lloyd's face in implementing TOM and gaining buy-in from all parties. He believes modernisation is essential and that the course being taken by Lloyd's is correct.
"The modernisation of the market has been on the radar for a very long time, and we have made genuine progress. There's a real commitment to getting things done.
"The latest TOM is addressing all the right things and strategically it makes perfectly good sense. The challenge in the marketplace is and always has been the fact that this is a marketplace; it is not a single corporate entity, it is a marketplace of firms, corporation and businesses, all of which have to be engaged in the process if you are going to get things done. But there does seem to be a very clear commitment on everybody's part to get it done, they're all pointing in the same direction, so that's pretty encouraging."
When it comes to Lloyd's, there is always the fear that modernisation will go too far and alter the essence of this esoteric establishment — but Max is unfazed. He has faith in the ability of Lloyd's to maintain its character.
"The reality is that an insurance transaction is not like buying or selling a share, it's not a question of making a price and pressing a button; big complex risks require discussion and negotiation. Clients and underwriters like to look each other in the eye. There is a lot that goes on before you get to the point of putting a stamp on a slip. The fact that we might be able to do the final bit electronically, which is perfectly sensible and a good thing, doesn't alter this.
"Increasingly you'll see business being bulked together, simple transactions being done electronically, real-time information being used – and why wouldn't you? But, what goes on here [in Lloyd's] in terms of people talking and discussing is important. Not every risk requires extensive dialogue, but that there is plenty to talk about.
"Already a huge amount of business goes on out in people's offices in the ether and not in this marketplace; nobody's pretending that all the business is written in Lloyd's, but it's still buzzing isn't it?"
After his three-year term with Lloyd's, Max moved on to Aon; while there he also explored nonexecutive opportunities. He retired from Aon in 2008.
"I had planned to step down from Aon at 60 to pursue a nonexecutive career and, once you get into that non-exec mode, you do get calls."
Much like the rest of his career, Max thrived in the non-executive world and gained chairmanships at the University of Surrey, Mitsui Sumitomo, ANV, the British Insurance Brokers Association (BIBA), Pioneer, London Insurance Brokers committee (LIB), and spent six years as chairman at the Financial Services Compensation Scheme.
Being a non-executive board member requires its own set of skills and provides its own challenges. Max, however, was primed for his new career path as he had been laying the foundations for some time.
"I did it step by step – I've been a non-executive on a small board for an investment trust since the late 1990s. I had the experience of sitting on the board for the University of Surrey counsel, and on the board of Mitsui Sumitomo before I became their chairman, and I had some good non-executive colleagues who had been doing it a while, and you learn from them.
"Somebody once said: ‘if anyone invites you to be the chairman of the company, the most important thing you have to do is make sure you've got a good chief executive. You have to do your due diligence'."
Max adds that another key aspect of being a non-executive is being selective with your opportunities. In the main, Max has selected boards that are in keeping with his leading-edge mindset and approach to the industry.
"It's really just a question of deciding which ones you do and which ones you don't want to do.
"I was approached by the team at Pioneer; it struck me as being a young, energetic, new, different, exciting business – so I joined them."
Max approaches these roles with verve and asserts that, while a non-executive director has less exposure than its executive counterpart, the role is still dynamic.
"Fundamentally, it is not your job to run the business; it's the job of the executives. The challenge in being a non-executive is in the ability to interrogate, challenge and support – or not – executive colleagues on the board to ensure that the business is meeting strategic objectives and complying with all the external governance requirements.
"You do this while making sure you're not inhibiting the ability of the executives to do their job. Some people can do it and some people can't."
Today, as well as being chairman at Pioneer, Max is exploring the emergence of takaful and the role London can play in its development. He was integral in the establishment of the Islamic Insurance Association of London (IIAL) and is MGA Cobalt chairman, which provides specialist Shariah-compliant products and services.
"Cobalt is an MGA with a specific modus operandi, in a marketplace that probably doesn't understand what [takaful] is all about. So they decided to set up a market body association that would facilitate education and communication and knowledge exchange. I thought about it and it seemed like a very sensible idea," he says.
"London and Lloyd's have always adapted to international requirements — laws, regulations, customs, and practices. We don't try and differentiate, we're not political, and we don't try to get involved with complex arguments. We just simply say, if that's the way business is done there, then that's the way we've got to do business. And takaful is increasingly how you do it in Muslim countries.
"We set up the association, and created a network of key players in and around London – brokers, underwriters, professional service providers, and interested parties from the banking sector, financial sector, and the City of London. We've also helped the Chartered Insurance Institute to rewrite the textbooks.
"We've had a couple of successful conferences and a number of events. It's progressed from a simple idea to something which is real; the association now seems to have got some legs."
With a global Muslim community of 1.6 billion and growing takaful markets in Malaysia, Africa, and the Middle East, Max believes this is a market the industry should be exploring more.
"We believe there is significant demand for Shariah-compliant commercial coverage. What Cobalt brings to the table is that its focus is commercial insurance, whereas most other takaful initiatives have been for personal lines.
"It may be embryonic at the moment, but our intention is to make sure that there is a broad, deep marketplace for Shariah compliant products that cover the whole range of products you can buy within the London marketplace, assuming that the product itself is acceptable within a Shariah-compliant world. The association is trying to explain all that, and Cobalt is trying to create the capacity and managing the risk flow."
He draws parallels between the past and the challenges of managing modern risk and the innovation needed.
As well as a modern take on markets, the industry is subject to a modern take on risk. Max acknowledges that the approach to risk management has changed over the years, but is keen not to place one approach above another – despite the modern challenges regarding speed to market with products and solutions.
"You can certainly look back and say that people were able to react on the face of things more quickly. Today we live in a world of intense regulatory scrutiny, but we also have massive amounts of information, so you can argue that the reason why these things take longer is because you have to deal with both of these things.
"You have lots more information, but you might have to go through a lot of hoops and over a lot of hurdles in order to get your product to the market.
"It is a different way of doing things; it is a different marketplace. The day of the ‘entrepreneurial underwriter' who had this great feel and touch, has rather given way to people with huge amounts of technology and information at their fingertips, working within an intensely regulated environment. They are no less clever, everything just takes considerably longer."
Regardless of the hurdles, Max believes the industry should still be tackling current risks head-on.
"It would be unfortunate if the (re)insurance market became risk-averse, because that is obviously somewhat at odds with what it is supposed to be doing."
One such current risk would be the evolution of cyber. Max offers a balance perspective on today's nebulous risks, but highlighting that in the past new risks were variations on what had already been seen.
"Risks like cyber are incredibly complex. As we've gone through the ages, insuring a 450-seat aeroplane at a time when most aeroplanes had 200 seats was largely a matter of understanding the risks associated with the bigger plane and going off and finding more capacity. I'm not saying it was easy, I'm saying it was clearer."
Max believes the London market shouldn't shy away from new risks like cyber, or from new markets, as being in the game is paramount to the market's survival. "As you get more and more local markets that are competitive, well-informed and skilled, inevitably they are going to take more of the business. The challenge for London is to retain its position as a major (re)insurer on big complex risks, while finding ways to get a share of local markets, which is increasingly being fulfilled by local reinsurers – there is no business by right."
Whatever way you cut it, Max is a man with weight behind his words, and they should be heeded. On his quest to find a ‘proper job' he stumbled on a career that would place him firmly at the helm. Though his hands are no longer on the steering wheel, Max holds the map, the compass and the telescope.
Max is refreshingly behind modernisation and innovation. He has seen the perils of standing still and not accepting change, and also the challenges of driving change through thanks to the post-R&R years. As he says, sometimes you just have to get on with it.
"My view has always been to do whatever we are doing better than we are doing it now."
His eyes are on the future for this industry, and with seats at the head of many a prominent board table – now and in the future – he will undoubtedly help to get us there.
From globalreinsurance.com Monte Carlo Special 2016 pages 22-27