Innovation, Climate Change and Economic Policy: Perspectives from Lloyd's of London

In a friendly chat with interviewer Charlie Rose this past Thursday, Lord Peter Levene of Lloyd's of London discussed how their company and the insurance industry advances on challenges facing the world economy and the unpredictable nature of doing business when the environment and political security are anything but certain.

Rose and Levene discussed many topics, especially those concerning the environment, with climate change, food and possibly water becoming the next scarce resource on a global scale. Problems which were of paramount concern to Mr. Levene came from the sharp rise in oil prices and the Sub Prime Mortgage crisis hurting commerce in the US and worldwide. His perspectives on oil were of interest, as he referred to the fact that since the 1970's oil crisis, leaders in Iran; one of the world's top oil producing nations, warned of possible issues arising from excessive use of oil. With oil being seen as a scarce resource 30 years ago, many provocative experts predicted that using oil to merely drive around in cars, as opposed to conserving this non-renewable resource would eventually lead to a major crisis. Levene pointed out that electric cars, which should have been produced since that time, are a wonderful alternative that has only recently become part of the dialogue and the lengua franca of product development and marketing. In a personal note he mentioned how his wife in London, who recently came into possession of a Smart Car was able to park anywhere, avoid London's dreaded congestion tax and even get free parking in some areas due to the use of an environmentally friendly vehicle. While this is more likely due to policy than the benefits of the car itself, for many urban centres it will likely become the norm in the near future as the one profitable SUV's become economic ball and chains for their manufacturers.

Another topic of discussion which was quite intriguing was the comparison of economies which were successes in the last few years as opposed to becoming part of the many economies struggling with current economic policy. Two nations which stood out were Ireland and Brazil, the former being pointed out for its innovative business tax policy which has siphoned investment from many other likely competitors into the Irish nation, and the latter for its reform of economic policies under the last two Brazilian Presidencies, resulting in a stable and progressive growth rate of 4% and institutional reforms that will likely repel any major currency crisis of the past and propel Brazil into the next major mega-economy like those of India and China, albeit more stable in the long run. In the end, there have been economic winners and losers in the last few years, but with new challenges and innovative members of the international community Levene suggested that with challenges comes the motivation for experts in their fields (not necessarily himself!) to produce solutions to crisis in the global community. A worth while discussion indeed. Please see the soon to be released video interview with Lord Peter Levene here.