Elliot Lane says complacency is replacing certainty in the London market
' Everytime someone mentions contract certainty and the London market, one of Oscar Wilde's epigrams springs to mind.
The Irish wit said: "One should never listen. To listen is a sign of indifference to one's hearers." That epitomises the London market's relationship with the FSA.
At the FSA conference, John Tiner did the worst thing possible - he decided to treat the London market like adults and gave the impression that he was removing the sword of Damocles from above their heads. By complimenting it on the good work that had been made, he inadvertently bred complacency into the market.
At Global Re's recent Countdown to Contract Certainty event, two underwriters were overheard saying as they left that though the speakers were very good, "why are we still discussing a dead issue"?
The FSA's right to levy a fine of 1% of an insurer's or broker's GWP for failing to meet the contract certainty deadline is not a dead issue. Kinnect may have not achieved its ultimate goal but the errors and ommissions issues surrounding the market prevail.
One company that is looking at the post-Kinnect world is Atos Consulting. Its head of financial services Sean Wells, who has been talking to various London market clients, made this observation: "It is worrying that numerous London market players are still complacent on the contract certainty deadline.
"They believe that things do not have to change, and it seems only a major fine from the FSA could force some of them into action."
At the recent Biba conference one of the most well-attended sessions (and after last week's column I feel obligated to say something positive about the conference) was on contract certainty.
In that session, Roger Flaxman brought home the fact that in the end, the buck will stop with the industry. He said: "One thing is for certain. As a result of contract certainty, if there is any perceivable disadvantage to the customer it will be this industry picking up the bill."
Airmic members have said that the work of many in the London market had been far more progressive than first thought. It must continue.
Returning to Wilde, another of the great man's lines encapsulates the gravity of the contract certainty debate: "It is a very sad thing that nowadays there is so little useless information."
Ignore it at your peril. IT
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