As Software Solutions Partners' (SSP) compliance manager I think it is important to balance the comments made by the recent article "FSA snub for software firms" (17 July, Insurance Times), about the FSA's lack of support of the establishment of a software house consultative forum.
The issues are really those of timing, content and style of communication.
In terms of timing, the FSA may be concerned that it does not lead software houses down the wrong path by encouraging us to focus attention on draft regulations which, by the very nature of being draft, are subject to change.
We saw this by the positive response the FSA has made to the feedback received on CP160 in its recent CP187 publication. If we'd taken as read the requirements in CP160 we would have gone off on a number of wild goose chases.
In terms of content and style, the software houses must demonstrate a keenness to work as partners with the FSA and ensure that the right people attend any such forum, i.e. those who actually understand the system issues and are in a position to help identify potential solutions. Whether a regular forum is the most beneficial method of working and communicating with software houses is something that the FSA is still contemplating.
Over the last few months I have been in direct contact with the FSA, as reported by our chief executive, David Rasche, and have been given excellent support when I have asked for specific advice or information.
However, from Rasche's perspective - based upon his previous experience gained from working in local government software houses during the 1980s, and at a time of massive legislative change - delays in involving software houses caused a significant impact on the end user. This is why it is important that all interested parties are involved sooner rather than later.
While the FSA has suggested that an actual forum be delayed until the reporting requirements are published, again as reported by Rasche, we have been invited to comment on the various consultation papers and draft rules and are able to pass on the concerns and opinions of our customers to the FSA. SSP has also been invited to request individual meetings with the FSA to discuss specific issues. The FSA's advice has been extremely valuable in helping us ensure that the information we are imparting to our customers is accurate and helpful.
Having said that, we do support the need for a consultative forum to be established, which will not only be beneficial to software houses in identifying any changes or enhancements that may be required to the systems we provide, but also to our broker customers and to the FSA itself. For example, although the consultation paper on regulatory reporting has been delayed until late September, software houses can help shape this and add value to the FSA audit process by ensuring that brokers are able to easily supply the necessary regulatory reporting as evidence of compliance.
SSP is planning a number of modules, such as complaints handling; system generated policy summaries/exclusions to evidence best advice, and so on, which are already scheduled for delivery. It would be in everyone's interest to work together to ensure that we help our mutual customers enjoy the benefits of early application
to the FSA and for the FSA to have the confidence that software houses can help them introduce a streamlined, efficient audit process.
I think it is up to us as software houses to capitalise on the "open door" policy, which the FSA has certainly shown to SSP rather than just bemoan the fact we are still waiting for a forum to be established. There is plenty we can be doing and are doing to assist brokers in their preparation for January 2005.
Software Solutions Partners
Today's approach to technology investment by some insurance companies is akin to buying a Ferrari and telling the driver that the car only has one gear.
Many companies in the insurance sector are failing to approach systems implementations correctly, because the employees that have to use the technology have not been involved in discussions about the strategic goals and objectives for the system.
Such companies are only providing employees with training on and access to specific parts of the system, and they are "shielded" from other areas not associated with their job.
This lack of awareness of the software's full capabilities means that many employees will continue to replicate manual processes rather than automate mundane admin functions. Not only is their business perspective severely restricted but their development of broader IT skills - a fundamental requirement today - is also constrained.
Strategic expectations of technology cannot be achieved if they are not communicated to those tasked with using the tools.
Professional services director
It Asda to be cheap
You may remember I wrote earlier this year commenting on the trend of supermarkets moving into insurance sales in partnership with the likes of Norwich Union (NU).
I commented at the time that Asda and its supermarket rivals will be selling insurance with the same mindset that they market tins of beans.
With this in mind, the interview with David Rutley in your supplement (31 July, Top 50 Brokers) made interesting reading.
It seems my original comments were pretty near the mark in view of Rutley's words: "We feel comfortable competing in a commoditised market because our business is about price." And further on in your editorial: "He is keen to exploit the fact that personal lines insurances are viewed as commodities, homogenous products bought and sold purely on price."
In other words price matters above all else. Make it cheap enough and it will sell.
You can imagine the discussions that took place between Asda and NU before they jumped into bed together:
NU - "So what is the most important factor for us to be to able to provide products to your customers?"
Asda - "It's got to be cheap."
NU - "Anything else?"
Asda - "How much will we earn from it?"
NU - "Anything else?"
Asda - "The leaflets have got to look nice on our tills. Oh, and when can we do a three for the price of two promotion?"
In view that Asda, Tesco and Sainsburys are all intent on being seen by the public as the number one supermarket, it is inevitable that within a short space of time all three will launch into an insurance price war, which will in turn result in companies like NU shedding tears in public about how much they have lost from the deal.
For the last ten years I have talked to a succession of account developers at NU who have all given me the no doubt well rehearsed routine: "NU does not want to be known as the cheapest insurance provider, we want our products to be sold on quality of cover."
Can we now assume that as NU has formed this business connection with Asda that the insurer is in agreement with David Rutley's comments on price and is now positioning itself as a sell it cheap and pile it high insurance provider?
I can't wait to sit down with the FSA in 2005.
When I am asked the question: "On what basis do you recommend motor insurance products to your customers?" I may just say: "I agree with Asda and NU. Cheapest is best everytime!"
I have an image that now brings a smile to my face. Two Asda policyholders collide in an Asda car park and each blames the other. They walk in to the supermarket together to be met by the usual inane meeter-greeter:
"Good morning gentlemen. Lovely day isn't it?"
Tempers fray and chaos ensues. I hope I'm there to see it.
A V Wilson and Sons
Still in Birmingham
With reference to your article "Well adjusted?" (31 July, Insurance Times), I would like to clarify that GAB Robins retains a fully resourced loss adjusting office in Birmingham with a strong and vibrant team across commercial, personal, liability and financial product lines.
What we have done, to enhance customer value is to migrate our Birmingham Customer Service Unit to our highly successful operation in Bristol which is the hub of our regional operation.
That has allowed us to consolidate our two Birmingham offices into one strategic location with cost and effeciency benefits such that we can now better exploit the business opportunities that exist for us.
As far as Bradford is concerned, our personal lines support function will transfer to the Manchester Customer Service Unit but the adjusting field force will remain largely intact. In addition, Robins Affinity Management, which achieved over 35% growth in 2002 and handles an average of 32,000 claims a year, will continue to be based in Bradford.
Managing director, loss adjusting
GAB Robins UK