Profit with purpose: Roxburgh says protection gap solutions must work for capital too
Sir Charles Roxburgh (pictured right), chair of Lloyd’s, has argued that closing protection gaps will require a more honest balance between public need and commercial reality. He was speaking at the 2026 BMA Forum, entitled “Charting the Course: Managing Risk and Complexity in a Rapidly Evolving Landscape”, which took place in Bermuda this week.
The discussion took place in the form of a Fireside Chat moderated by Karel Van Hulle (pictured left), member, board of directors for Bermuda Monetary Authority, professor em. KU Leuven and Goethe University Frankfurt, head of insurance and pensions and the European Commission.
Roxburgh framed the protection gap not simply as a failure of capacity, but as a challenge that sits at the intersection of pricing, public policy, capital discipline and risk mitigation.
Van Hulle asked how Lloyd’s balances the urgent need to narrow the protection gap with the “bedrock requirement” of delivering attractive returns to investors. Roxburgh’s answer was clear: there is no durable insurance solution unless capital is willing to support it, and capital will only do that if it earns an adequate return.
Since becoming chair, Roxburgh has been keen to move away from any suggestion that top-line growth should be treated as an objective in itself. He has said growth is an outcome of a good strategy, not the strategy itself. In practical terms, that means the market should focus on underwriting performance, return on capital and sustained profitability rather than chase premium volume for its own sake.
He warned that setting crude growth targets can encourage poor decisions. For Lloyd’s, he said, long-term success depends on maintaining underwriting profitability through the cycle. The market’s overall target remains a 12% return on capital over a ten-year period, which he linked to a sub-95 combined ratio. That, in his view, is what capital providers reasonably expect, and without that level of performance the capital needed to back future solutions will not be available.
This is where Roxburgh’s view of the protection gap becomes more nuanced than a simple call for more innovation or more capacity. He accepts that the insurance industry has a critical role to play in addressing big societal challenges, particularly those linked to climate and natural catastrophe risks. But he also insisted that there are hard economic realities that cannot be wished away. “You can’t close the protection gap unless you can get a price for the risk that will provide a return on the capital,” he said.
The session acknowledged growing pressure on insurers and reinsurers to support resilience, stay in difficult markets and help communities adapt to more severe risks. But if pricing does not reflect exposure, or if political systems are unwilling to support the cost of protection, the gap will remain.
Roxburgh was careful not to cast this as an industry-only problem. On the contrary, he stressed that solutions require coordination between insurers, regulators and political leaders. Public policy has to reduce risk at source through better building controls, better wildfire management, stronger enforcement and more thoughtful land use.
That emphasis on mitigation is important because Roxburgh does not see underwriting discipline and societal resilience as contradictory. In his account, they are interdependent. Good underwriting is what makes long-term participation in difficult risks possible. Without discipline, capital eventually withdraws, and the protection gap gets worse, not better.
This is why he also positioned Lloyd’s as a marketplace particularly suited to complex and difficult risks. He drew on the market’s long history of insuring earthquake and catastrophe exposures to show that Lloyd’s underwriters have long been willing to tackle challenging risks, provided they have the capability, data and controls to do so properly. Appetite alone is not enough, he said. The market must ensure that underwriting ambition does not exceed underwriting capability.
He also linked this to the role of innovation. Lloyd’s wants to create conditions that allow underwriters to respond to new categories of risk such as advanced energy infrastructure, AI-related exposures and natural catastrophe volatility. But innovation, in this framework, is not a substitute for financial discipline. It is a means of building better, more scalable solutions that still respect the economics of risk transfer.
Van Hulle observed that when the natural catastrophe protection gap was being discussed at European level more than a decade ago, the industry tended to say the answer lay with governments, while governments said the answer lay with industry.
Roxburgh agreed that this circularity remains a problem. The gap will not close unless all parts of the chain play their part, from public policy and mitigation through to underwriting, capital and regulation.
He also made clear that some of the strongest examples of narrowing the gap begin before insurance even comes into play. Better housing controls, stronger codes and better risk management can reduce the size of the problem before coverage is ever priced. In that respect, the private sector can contribute not only through products but also through insight and risk analysis that help governments and communities make more sensible decisions.
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