28 NEWS As I see it…
Nick Lowe, director of government affairs for the International Underwriting Association comments on new proposals for UK regulation of fi nancial services.
Nick Lowe
The general insurance sector played only a small role in the fi nancial crisis and was able to weather satisfactorily the problems arising from falls in asset values and shortages of credit. Consequently, there have been few calls for changes to the prudential regulations for general insurance.
Indeed, it is generally recognised that the new principles-based regime, known as Solvency II, which is soon to be introduced will provide a sound system of regulation, balancing risk against capital requirements and encouraging good management.
Our principal concern in relation to the new proposals is that the prudential regulator of insurance should be an integrated authority with a good understanding of general insurance, of its role in the economy, of its strengths and weaknesses and of the importance of the London insurance and reinsurance industry in the UK and the global economy.
Only an integrated well informed body with competent staff experienced in insurance matters will be able to develop and implement the long-term holistic policies that are needed for sound and consistent supervision of solvency and risk management within the industry.
If that body is also to be incorporated into an overall single prudential regulator for fi nancial services, then there may be benefi ts in terms of synergy, provided that the senior management of the single prudential regulator has a deep understanding of insurance matters and is not overly dominated by banking concerns.
With regard to regulation of systemic risk and oversight over long-term trends and the broad effects of changing practices and new products in fi nancial services at the national and global levels, we agree that overarching structures are required to ensure that risks are identifi ed and mitigated in a timely manner.
While insurance and reinsurance are not generators of systemic risk, they may be threatened by it and as key branches of the fi nancial services industry need to be integrated into all analyses of systemic risks to the economy.
We welcome, therefore, the importance attached by the new Government to the need for joined-up macroeconomic supervision, but also feel it necessary to emphasise the need for the bodies charged with undertaking it to be adequately staffed, advised and infl uenced by individuals who have a profound knowledge and experience of the insurance and reinsurance industry, either as regulators or practitioners.
Insurance Brokers’ Monthly July/August 2010
Lloyd’s brokers ‘more confi dent’
A study has revealed that 84 per cent of Lloyd’s brokers feel “very positive” about conducting business at Lloyd’s and have noted improvements in the issuing of policies and settlement of claims.
According t the London Market Association, brokers are now more confi dent about conducting business at Lloyd’s than they were two years ago. This assessment of the Lloyd’s market comes from part of the Gracechurch London Market Study 2010, an independent annual study by a leading insurance consultancy.
Gracechurch Consulting interviewed 301 London Market brokers in-depth to ascertain their satisfaction levels with the business processes available when placing insurance at Lloyd’s. Leading London Market insurers also use the study to benchmark their own service performance.
The study showed a leap in number of London Market brokers who are favourable to transacting business at Lloyd’s in the next three years - 84 per cent say they are very positive in 2010 compared with 67 per cent in 2008.
Among the other key fi ndings of the study are that reinsurance brokers are the most positive about Lloyd’s as a market in which to do business - 91 per cent of those reinsurance brokers interviewed feel very positive about using Lloyd’s as a market.
And, on all business processing measures tested, the overwhelming majority of brokers now rate Lloyd’s as on a par with, or outperforming other markets. In particular brokers say that Lloyd’s performs ahead of other markets on:
Obtaining quotations– 72 per cent of brokers say that Lloyd’s is better than other markets Agreeing a fi nal risk acceptance - 61% of brokers say that Lloyd’s is better than other markets Processing and settling claims – 42% says that Lloyd’s is better than other markets.
David Gittings, chief executive offi cer of the LMA, said: “This independent research is great news for managing agents at Lloyd’s whose hard work and commitment has been refl ected in broker satisfaction being at an all time high. The market has embraced process reform and can now demonstrate not only its strong underwriting and claims performance, but also that it is one of the most effi cient markets in the world.”
“This survey affi rms that brokers fi nd Lloyd’s a very attractive and effi cient marketplace in which to place their clients business,” said David Ibeson, chief executive offi cer of Catlin Underwriting Agencies Limited, which manages one of the largest syndicates at Lloyd’s.
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