Market Reform Group chair Douetil confident the market can reform of its own accord

Dane Douetil, the outgoing chairman of the Market Reform Group (MRG), this week spoke out against mandating the use of electronic systems in the drive for process reform.

His comments put him at odds with Lloyd’s, which has warned that forcing companies to use electronic systems was still an option, should companies not hit targets for adoption.

Douetil, who is also chief executive of Brit Insurance, told Insurance Times: “I do not like the word ‘mandate’. The mandating route would mean we have failed. It is a last resort.

“The only people who could mandate are the FSA or Lloyd’s, within its own community. But this is the London community – we can’t go around to insurance companies with mandates. Instead, we need to explain to companies why they need to meet the standards.”

Last month Sue Langley, Lloyd’s director of market operations and North America, said that she hoped no mandate would have to be made in 2008 but that “all options remain open”.

Lloyd’s chief executive Richard Ward has said mandating the use of electronic systems may be necessary if Lloyd’s companies fail to hit targets.

Nevertheless, both Douetil and Langley were confident that the market would be able to reform of its own accord, citing an improvement in the use of electronic claims files (ECF) to 60% after the first two weeks of October.

This compares to 45% usage at the end of September, against a target of 60%.

Asked whether the use of ECF would be mandatory for failing managing agents next year, Langley said: “If you asked me a week ago I might have said yes. But I have been encouraged by the progress we have made this month. ECF use for the first two weeks of October hit 60%.

“If we are not going to hit the targets then it is something we will look at. If we have to consider doing it, we will.”

From 2008, it will be a requirement of new market entrants to use ECF for all in-scope claims.

Douetil did not object to this and distinguished the requirement of new managing agents to use ECF from making it compulsory for all managing agents.

He said: “You can say to new entrants that these are the minimum criteria and, if you want to be part of the community, this is what you have to do. If the use of ECF is one of these, then I think that’s ok.”

Mandatory argument

Is the difference in opinion over whether Lloyd’s should force companies to use electronic claims files a bad thing?
The Market Reform Group needs to have all its members working towards a common goal. It says: “To reform a market requires all firms to act with some degree of consistency of direction.”
Differences in opinion are to be expected and it could be argued that scope exists for different approaches to implementation – as long as the ultimate goal of reform is achieved.
But if senior market figures begin to object to steps Lloyd’s is taking it will not help the smooth progress of reform.