The Blob

08JLY99
The other day I was reading one of our domestic British papers, the Sunday Times, when I
came across a report by Andrew Sullivan who was attempting to describe the world as it now
is in the post cold war era. He says that we have simply given up the idea that either the State
or the private sector has all the solutions to problems. Instead of the old struggle between
people of the left and right we have instead a war against what the Americans nowadays
apparently call the Blob. The Blob is defined as any entrenched bureaucracy or interest
group-public or private-that stifles excellence and prevents problems being tackled by novel
means.
Those with a passing knowledge of film history may also know that there was a film called
The Blob in the 1950s which featured a teen aged Steve Mcqueen whose warnings to his
fellow citizens that a vast amorphous polyp thing was about to engulf and consume them was
ignored by townsfolk until it was too late.
These speculations led me to wonder just how observers would describe the features of the
Blob in our small world. What qualities can you see as you contemplate the Blob in marine
insurance?
Well, the Blob is certainly white or whitish. Despite the increasingly global nature of
international trade and shipping, the centres of marine insurance are still overwhelmingly
located in traditional cities like London, Paris, Oslo, Hamburg, New York, Hartford and so
on. A fairly vocal campaign throughout the 1990s by large buyers in Asia is slowly
prompting a relocation of assets and expertise to locations closer to the buyers in Asia but
there is a long way to go before there will be much change in the balance. For now, the
discount wars are still raging in the traditional market centres. What emerges from this will
certainly be a larger, more consolidated Blob, with all the problems of mobility which beset
gargantuan beasts.
The Blob at heart has the urges and appetites of a large centralised creature. Living as we do
now in times where it is relatively easy and cheap to distribute everything to do with an
operation so it can live close to its customers and listen to their needs and problems, the Blob
still likes to hang back in cities where there are few if any active shipping companies, where
wharves have long become apartment complexes and cargo handling a memory in the old
folks homes. So there is still a major amount of paper and white collar sweat being
generated in places like London EC3 where the Blob continues to lodge its considerable
substance. It is only by piling up costs and assets in a traditional centre of excellence, the
argument goes, that you can generate the momentum you need to prevail in todays marine
insurance world. This would be a compelling point of view were it not for all those
gentlemen from places like Munich, Cologne, Zurich and Bermuda who are calling on
tremulous organisations all over the industry and making them offers they cannot really
refuse.

The Blob got so big in marine insurance because the environment in which it lives and works
has long been relatively benign in modern terms. Shipping and transport, with notable
exceptions are, as I write, still the most paper bound industries left in the white-collar world.
In most major shipping companies there are times in the day when it is hard to use the lifts
because the couriers are in the building filling their carts with bills of lading. Each day there
is still to be seen in the streets of insurance centres people in the claims business with great
bundles of paper for approval by underwriters. These things are of course changing but The
Blob has been the beneficiary of every sophisticated technique in the stallers bible to slow
down the arrival of the paperless era. In the era of mainframe dominated computing, many
companies discouraged the use of PC based solutions on the grounds of better control and
tighter security. Thus although many shipping companies had enormous computing centres
in various locations around the world, their e-mail abilities were limited and confined to
internal recipients.
Thus during the rise of the Internet, much smaller start-up companies were able to enjoy the
advantages of global networking while the slower moving brethren were still relying on their
systems within Local Area Networks (LANs) and were very slow to adopt the Internet as a
gateway in to the future. Even today, the numbers of web-based applications in our industry
are underwhelming. In about two years, this absence of ease and familiarity with trading on
the Internet which is still treated mildly in the business-to-business world will become a
much more serious condition and may prove fatal to many companies. It is not hard to
explain why this should be so. The Internet is cheap and available globally to customers.
Sooner or later every one will have to use it extensively or die.
In Freudian terms the Blob is an anal-retentive. The Blob needs above all to control and
cannot support the unstable, rather unstructured network style which is so characteristic of
our times. Although it is possible to distribute and offer to clients and customers the levels of
judgment and skills necessary in accountancy, law, engineering, architecture and so forth,
there is a school of thought in marine insurance that it is fatal to long term economic health to
distribute the basic day to day operations of underwriting and claims handling to regional
centres where they can operate within the cultures, societies and time zones of the regions or
places concerned. Instead the approach has been to use a chain of intermediaries to pass
messages up and down the line between the buyers and the sage within the Blob often called
the Underwriter.
This would perhaps not matter so greatly were it not for the terrible pressures on price and
timeliness which are nowadays so obvious in the industry. The defenders of The Blob often
point to the sheer costliness of multiple operational centres and the relative frugality of a
centralised approach. The always assumes that the costs of The Centre are a given and the
costs of overseas operations and distribution costs are extras-on-top. Unfortunately the
suburban idyll celebrated in rhyme and prose does not come cheap and it contains a
substantial and little acknowledged price.
If you people your marine insurance industry operations with anglophone suburbanites you
must also pay the cultural price and accept the long term economic and commercial

consequences of operating a global industry with a staff of not particularly good linguists and
area specialists with less than perfect social, cultural or commercial empathy with much of
the industrys customers. This leaves very deep footprints in the shape of the industry. It
explains why the London marine insurance market has made little inroad into transport and
cargo handling markets of Europe. It also explains why the industry has really made very
little progress in developing products which are accessible to buyers in languages other than
English.
I am very grateful to the editors of this publication for entrusting me with this part of their
paper. Readers should kindly remonstrate in the usual way should they feel the need.
(8th July 1999first published: Lloyds List)