Roger Sellek's speech, in which he said: “Since captives have tax considerations as their primary focus, they might not be as tightly geared up for profitable underwriting as the syndicates that comprise the bulk of Lloyd's”, shows that Lloyd's remains totally ignorant about captives and that this is the prime reason they have failed to attract them. For example, how does he explain the 400 captives in tax-paying Vermont?

As someone involved in setting up the SmithKline Beecham captive and trying to persuade Lloyd's to encourage captives,

I know that:

  • Captive syndicates, because of their onerous regulations and conditions, do not expose the central fund.
  • A captive's syndicate has to have approved aggregate stop loss protection, provide a parental guarantee, produce a fixed business plan, policy wording and reinsurance arrangements before operation, so Lloyd's know specifically any worst-case scenario is fully covered by the capital provider.

    The real reason for failure was unfriendly, bureaucratic and ignorant regulators and poor marketing. If the captive rules applied to ordinary syndicates, Lloyd's would not be reporting such appalling results.

    To suggest that captive owners and their advisers are, in some way, less competent than the average Lloyd's underwriter not only flies in the face of the facts but is an insult to the real clients of Lloyd's – that is, the major companies which pay premiums and probably own a captive.

    Mr Sellek should be more honest, factual and self-critical in future and even ponder the possibility that Lloyd's, for once, might be to blame for failing to sell an excellent product and not just resort to abusing the customers.
    Paul Bawcutt
    Risk and Insurance Research Group (RIRG)

    No to ‘one for the road'
    Following the article in Insurance Times (May 17), we would like to make it clear
    that, while the drink drive clause has been removed from our policy wording, we in no circumstances endorse drink driving or support the comment from Richard Mikula of Topaz Insurance Services: “In this country, we do not have zero-tolerance alcohol laws and most people assume they are safe to drive after a couple of pints.”

    As an industry, we should support and endorse initiatives aimed at eradicating drink driving and not give the message that “one for the road” is tolerated.
    Gary Thomas
    Underwriting operations manager,
    Zenith Insurance

    Unite for road safety
    I was disappointed to see brokers apparently refusing to implement what appeared to be a reasonable exclusion for accidents which occur as a result of drink driving (Insurance Times, May 17).

    Apart from the issues it raises over who sets underwriting criteria (the broker who sells the policy or the insurer who has to pay for the losses?), I would have expected the whole industry to be united in trying to promote higher safety standards. Why should the majority of law-abiding insureds subsidise the reckless minority who persist in drinking and driving?

    Richard Mikula of Topaz Insurance Services appears to be suggesting that providing someone “assumes they are safe to drive”, it is OK for them to do so, even though this is a criminal act. Our “zero tolerance alcohol laws” are in fact among the loosest in the European Union.

    The exclusion would only apply once the insured had been found at fault in causing an accident, and it is hard then to view them as unfortunate innocents.

    Without wishing to appear ageist, I suspect Mr Mikula belongs to the older generation, who grew up in a time when drink driving was seen as acceptable. This is no longer the case, and there is irrefutable evidence that drinking even a “couple of pints” impairs driving ability.

    I also had great difficulty accepting that the GISC requirement, that policyholders understand all exclusions, would make this policy unsaleable. At least one of the major direct writers currently has this exclusion in their policy as standard. Presumably if the insured replies: “No,

    I want a policy which will cover me when I drink drive, as I do so regularly,” the broker will then sell him a policy from a different insurer? I would expect Zenith would be quite happy to be selected against in this way.

    Drink driving costs this industry millions of pounds and, more importantly, wrecks lives. I look forward to a time when the industry refuses to provide indemnity for this stupid, selfish behaviour.
    John Hansen

    GISC iniquities
    As one of the minnows of the insurance world, I'm being told that I must be a General Insurance Standards Council (GISC) member if I wish to continue trading with my present partners within both the Lloyd's and Company Markets.

    I understand that both the Association of British Insurers (ABI) and Lloyd's have stated categorically that member companies may not trade with anyone who is not GISC-registered and this is enshrined within the GISC rulebook.

    I spoke to a Lloyd's motor syndicate, which I will refrain from naming, and asked them whether it had registered and what its registration number was. Imagine my surprise when I was told that they were not registered with the GISC and there was no need for them to do so.

    This brings up the following questions: what right do they have to insist that I register if they are not going to; why does Lloyd's not insist all their syndicates be registered; and would I, as a registered GISC member, be in breach of the rules and subject to disciplinary action if I placed business with them?

    I would be interested to learn via your columns what the official view of Lloyd's or the GISC is to these matters.
    PW Gregg
    Elm Green Insurance

    Promote intermediaries
    Now that the insurance companies are saying that they will only deal with GISC-registered intermediaries, it can only be a matter of time before intermediaries are forced to join this new organisation or lose their livelihoods.

    Looking at the GISC rules, it's clear these are for the protection of the policy-buying public and do nothing for the intermediary.

    It may be my cynical view but it seems to me that the first step is to identify who you are dealing with (registration with GISC). Once this has been done, rules and regulations can then be imposed with little or no consultation.

    We already have an organisation in place to promote professionalism and qualifications within the insurance industry, the Chartered Insurance Institute (CII). But there is little or no compulsion to obtain any qualifications to “practise insurance”.

    Let us hope that in the future the GISC and CII will speak together as a common voice to promote the services of GISC-registered intermediaries to the insurance-buying public.
    Nick Beere
    Morton Michel

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