Groupama chairman and chief executive of Groupama, Tony Lancaster, has called for commercial brokers to become part of the Policyholders' Protection Board (PPB) and its successor, the Financial Services Compensation Scheme (FSCS).
Speaking at the Chartered Insurance Institute's (CII) annual conference, Lancaster said: “Brokers should be part of the PPB. We are all in this together. We cannot go on like this.”
He said it was unfair that insurers “carried the can alone” for failed companies in the industry. Brokers, too, were part of the decision-making process and therefore had some liability, he said.
But head of communications at the General Insurance Standards Council (GISC), Catherine Nicoll, said: “I just do not think brokers have the financial strength to do it.
“After all, the question as to whether or not an insurer is solvent has nothing to do with brokers.
“Obviously it is very important for brokers to place insurance with people who are going to be there to pay claims.
“But the responsibility of knowing whether or not an insurer is solvent is more the responsibility of the ratings agencies and the Financial Services Authority (FSA),” she said.
Lancaster also said the PPB should not cover losses incurred by commercial policyholders in cases such as the collapse of Independent Insurance.
“It has to stop somewhere,” he added, saying businesses had far more resources than individuals to absorb losses.
New whistleblowing rules were also discussed at “The Hot Topic” debate, chaired by journalist Maya Even.
AXA chief executive, Andy Homer, said new regulations would place a massive burden of responsibility on the shoulders of insurance professionals for policing the industry.
The rules, which will come into force when the FSA gains its full powers at the beginning of December, ask “approved persons to deal in an open and co-operative way and disclose appropriately any information of which the FSA would reasonably expect notice”, said Homer.
“The laissez-faire attitude in the property and casualty market is going to come to a grinding halt from December,” he said.
“You are in deep trouble if you do not understand your responsibilities now.”
But Homer said it would be difficult for individuals to decide when to blow the whistle on debatable practices. He added that pricing, reserving, incentives, claims payments and cartels were areas where individuals might be expected to judge their own and other firms.
“There are certain parts of our business that are pretty murky.”
Lancaster added: “There is no acceptable excuse for poor reserving. Writing our policies with inaccurate reserves is clearly a road to disaster.
“We have to be accountable and take responsibility.”
Insurers needed to change the way they thought about business, he said. He added that, for too long, underwriters had been content to live off investment returns.
