In your editorial (Insurance Times, July 19) you state: “The regulator is paid by the public to protect the public.” The regulator is, in fact, paid quite well in fees each year by the self-same insurers it is supposed to regulate. In this, it is the insurers who are perversely the “paying customers” of the FSA.
The failure of an insurer badly tarnishes the reputation of the whole market, but the market itself is then left to pick up many of the pieces. We remaining insurers are required to pay for these failures via the Policyholders' Protection Board (PPB) levies. Total PPB levies are now in the multi-millions of pounds. My company will soon be asked for its share towards the Chester Street debacle; like many other insurers, I believe our company was not even in existence at the time when these losses arose. The much larger bill for Independent I imagine will follow shortly.
The prudent and professional among us are thus (doubly) penalised, being actually required by law to pay for the failures, incompetencies and, sometimes, the outright frauds of our competitors.
I am sceptical enough to think the new Financial Services Act will do little in reality to prevent the grief of another insurer going down.
Something radical is needed and many have a part to play in this. I note that, despite their thoroughness, Standard & Poors still had Independent rated as BBB secure at the time of the provisional liquidation, even though underwriting had been stopped a week previously.
Everyone concerned with the financial security of insurers could now usefully review their own methods and analysis, hopefully to be based on real life practice rather than remote theory. And, as one of the insurers who is still very much a “paying customer” of the FSA, I would like to know what concrete, effective action our regulator will now be taking on our behalf.
As professionals, we have nothing to fear whatsoever from strong regulation – let us please have what we are paying for.
---
Bill Adamson
General manager
The Electrical Contractors'
Insurance Company
Orpington
Road Runner fees remain the same
Your edition of July 5 carried an article regarding Road Runner administration fees in respect of transferring cover to Royal & Sunalliance (R&SA) from Independent.
I had expected that after the article this practice would cease – not so.
An existing client seeking advice for a colleague in the motor trade who had been asked for an additional £53, referred a case to me this week. I checked with Road Runner, which confirmed a £20 fee and immediately agreed to waive it. No doubt I shall soon have another client.
More serious is the fact that the chargewas shown as “premium including insurance premium tax” and nowhere was the fee mentioned.
Surely this is against the rules of any of the past, current or future regulators, as I always understood that a fee must be clearly identified. I have no objection to the fee in principle, merely the attempt to sneak it through.
Once again, your columns have brought an important principle to the fore.
---
Stephen E Hewett
Insurance practitioner
Southampton
Let's check the insurers
MP Ward's letter “How many more?” (Insurance Times, July 19) strikes a common chord that no one has addressed. We need a system, be it regulation, bonding or otherwise, to assure clients (especially corporate ones) that the insurance company to whom they pay their premium is financially sound.
The current system seems to rely totally on the information and strength shown in annual accounts prepared by information supplied by the insurer.
Surely there is a duty on the Association of British Insurers (ABI), Financial Services Authority (FSA) or the Department of Trade and Industry (DTI) to check the accounts supplied are true and accurate?
The latest circular from the General Insurance Standards Council (GISC) clearly shows in Note 1 that they will monitor the “financial soundness” of intermediaries only. As this body was created to give all parts of our industry a form of self-regulation, why does it not impose the same checks on insurers – or do they have too much of a say in the content of the rule book ?
Let's be honest – if an intermediary collapses, invariably it is only insurers (who have had the opportunity to check client account balances should they request or feel uncomfortable) and broker staff who lose out.
If insurers collapse, then it is the premium-paying public that suffers to varying degrees of seriousness. Remember, it is this person in the street who pays our wages.
So who should the GISC really monitor financially in the public interest ?
---
David Mackie
ET Knagg & Co
Poulton le Fylde
There for members
I write regarding the situation reported in your article entitled “Dispute resolved thanks to IT” (Insurance Times, July 10) involving BJP Insurance Services, a client of Gary Lane of claims assessor Insco and a member of Institute of the Insurance Brokers (IIB).
We at the IIB had received details of the complaint from Mr Lane and had duly contacted our member, requesting an explanation. However, in the meantime, events had overtaken this line of enquiry and Mr Lane's client chose to exercise its legal rights. Consequently, BJP reported the matter to their professional indemnity insurers.
As explained to Mr Lane, because of these events, our assistance was now restricted and our involvement or any comment made by our member could prejudice BJP's position.
Although the IIB does not have any statutory power to investigate complaints involving our members, we always provide assistance and mediate whenever possible, unlike the GISC it seems.
The IIB aims to assist clients with any query or complaint they may have against an member and we will always endeavour to resolve and explain the situation as quickly as possible. Resolutions and negotiations are dependent upon the cooperation of our members, but this is always forthcoming.
---
Elizabeth Adams-Reid
IIB technical and marketing executive
Northamptonshire
