Like A LOT of people, the only time I think about insurance is when I want cover for my car or house. The events in the US on 11 September have changed all that and now everyone is talking about insurance.
"World Cup could be cancelled" headlines sent shivers down my spine. For many, the thought that the World Cup in Japan and Korea was in danger of being called off days after England qualified seemed preposterous. I didn't even know the World Cup needed insurance or that AXA, which also sponsors the FA Cup, was the company that covered it. Thankfully, that problem seems to have been sorted, with Fifa coughing up more cash.
Political failure
At the Labour Party conference, I realised even political parties also take out insurance or, in this case, failed to do so. Every year, the highlight of the conference for the fundraisers is the gala dinner. Company bosses pay hundreds of pounds to sit at a table with a junior minister no one has ever heard of and thousands of pounds to sit on a table with Gordon Brown. Because of the terrrorist attacks, party bosses wanted to cancel the bash but, because they had failed to take out insurance, were forced to go ahead with it. However, guests didn't get their money's worth, because Blair failed to turn up. I wondered if it would be possible for a political party to insure against losing an election, but realised the Tories couldn't afford the premium - and knowing the Tories, they would probably have ended up with one of the companies that have gone bankrupt.
It was to protect the public from such rogue companies that one of the first things the new Labour government did was to set up the Financial Services Authority (FSA). This almost caused the governor of the Bank of England, Eddie George (or Sir Edward, as he now likes to be called), to resign. I will never forget his fury as the new Chancellor, Gordon Brown, told him the FSA would include the regulation of banks. George felt this was a comment on the bank's record in this area - and he was right. The Bank of England had failed and so it had the task taken away from it. George may have won the prize of independence, but he is still sore that he lost banking regulation. The FSA now does the job but, if Gordon Brown were to look again at the FSA's role in regulating insurance, he might have to give it more power.
Enough excuses
At the moment, when an insurance company goes under and ordinary folk lose out, the FSA washes its hands and blames the company auditors. What Brown should do is to get the FSA to set up a hit squad of auditors who would have the power to go into any firm at any time. This would stop the FSA from giving pathetic excuses for its inaction and might actually force the small minority of companies who give insurance a bad name to put their houses in order. It may also stop insurance making the news for the wrong reasons.
