The horse has bolted without warning

The horse has bolted without warning

Following my recently published letter it seems that I am compelled to write again about the changes taking place in the Lloyd's Market as a consequence of Lloyd's decision to transfer the burden of supervising trading relationships from themselves to managing agents. I received today a circular from the London Market Insurance Brokers' Committee (formerly the Lloyd's Insurance Brokers Committee) advising that it, in liaison with Lloyd's, has established guideline criteria for ascertaining the credit worthiness of brokers.

This is far too late; the horse has already bolted. Lloyd's managing agents have already conducted their broker reviews in large part, if not entirely. As a consequence of this we, and other small Lloyd's brokers (small in our case meaning annual commissions of approximately £1,200,000), have already had agencies cancelled or restrictions placed upon them.

In this process not a single managing agency contacted us before the review to request any financial information or communicate the criteria for their judgment, nor have we been allowed to make any formal presentations. In the absence of this I personally contacted virtually every managing agency to provide them with basic current information and to advise them of a contact point for further information should they need it. I received only one response (qualified approval provided we do not increase our business with the relevant syndicate). I have also personally sent three faxes on this subject to the compliance officer of the managing agency with whose syndicates we place our largest single contract and have not even had the courtesy of a response.

I find it staggering that Lloyd's, after washing its hands of the responsibility, failed to provide guidance. This omission means that, as in our case, after 43 years as a Lloyd's broker, with profitable current trading, shareholders funds exceeding 30% of commission income, solvency at 150% of GISC requirements, £5,500,000 errors & omission cover, virtually zero bad debt, and minimal “late” premium payment (better than market average), counts for precisely nothing.

Our position aside, the obvious question is that if we don't qualify – what chance has Lloyd's of attracting current non-Lloyd's brokers under its much vaunted “Developing Broker Relationships” initiative if a similar process is applied to those brokers? Should they be told before they try to join ?
Neil Golder
Compliance Director

Need to comment

I read with interest your company profile featuring BJP in the February 22 issue.

I feel I should make a few comments on some of the matters raised. Mr McGoun just made an offer for one of the subsidiaries of Helm Group UK. Since then Helm group UK has been the trading company for all of the subsidiaries.

Helm Group has a clearly defined strategy, moving in a totally different direction to that of the old management of Helm Insurance Brokers and our growth strategies are ambitious and aggressively pursued by the team.

A demonstration of our success can be seen in the implementation of the Policy Master Sirius system, with Helm being one of the first large independent companies to use this advanced technology. In addition to myself, there are two other major shareholders, and our recently completed strategic review is designed to see the Helm Group UK in good hands long after I sail into the sunset.

This is a big market and there are plenty of opportunities for all of us to prosper, as indeed we plan to continue to do.
Peter Carr Simmonds.
Helm Group UK

Refreshing service

After reading all the letters published in Insurance Times regarding insurers' shocking service levels and the attitude of their staff, I would like to offer my sincere thanks to MBP Insurance (formerly Minibus Plus).

It is so refreshing to be able to deal with a company whose service levels are so excellent, all of the staff we deal with are always happy and jolly and nothing ever seems too much trouble for them.

Keep up the good work MBP!
Phil Warman
Warman & Co Insurance
Yeovil, Somerset

Wishing the IIB success

The letter “GISC impressed us” (March 1) is, I assume, to draw attention to the amazing fact that our industry has managed to turn round an item of post in five days.

Unfortunately, it is not confirmed whether the document involved contained just one or two or even three errors, any of which would be equally amazing. One of the main excuses used in our industry for a lack of service/ quality control, is too much for too few unqualified persons to deal with. This is obviously not the case at the General Insurance Standards Council (GISC), at least in the new membership department.

Unlike R Sheik I am not looking forward to having my little business dictated by the likes of insurers such as Groupama (who have started already) and wish the Institute of Insurance Brokers (IIB) unqualified success in their pursuit of the Insurance Brokers' Registration Council (IBRC) mark II, provided it is compulsory for all brokers/intermediaries to belong to it.
Tony Smith
Roberts Insurance Brokers

Tired of the propaganda

Am I the only insurance broker who is getting a little tired of the propaganda and misinformation continually being fed us by the pro-GISC lobby? I refer in particular to the anti-IIB and ABTA diatribe from Mike Slack in your February 22 issue. Given Mike's position when he was actively involved at the IIB one could accuse him of having a few strange bed-fellows these days.

Furthermore, he advises us all that the only reason the government imposed 17.5% IPT on travel insurance is because of past abuses by the travel industry. Where did he obtain such privileged information and why did he not inform us all of this? If he is correct then why did the government choose to impose this tax sold through insurance brokers?

What a pity Mike chose that piece of news to respond to rather than the letter from Richard Mikula of Topaz Insurance Brokers that appeared in the same edition. How will the GISC deal with direct insurers who continually undermine the intermediary channel with their misleading advertisements? Why does Mike Slack not choose to comment or criticise his fellow GISC board members?

As I see it, an insurance broker can be put out of business by the GISC. If I am guilty of misconduct I can be expelled from the GISC and all GISC members, i.e. insurers, will be advised they can no longer deal with me.

What happens when an insurer, dealing with the public, is guilty of misconduct? Or what happens when the check-out girl at Tesco is guilty of misconduct relating to the sale of insurance? Will GISC effectively close them down? I don't think so.

So despite all Mike Slack's pontificating about level playing fields, I do believe the product providers are selling us up the river. Furthermore, I smell a hidden agenda being applied by certain individuals.
John H Fox
Bevan Fox Insurance Brokers

Please join the club

I was pleased to see Cathryn Taylor's acknowledgement of the British Damange Management Association's (BDMA) promotion of standards in the damage management industry and hope she will consider contributing personally to the debate by joining the association. We would be delighted to welcome her onto the Standards Committee where her views and enthusiasm would be greatly appreciated.

The points she raises about corporate culture and presentation are, of course, separate issues which are appropriate to all industries.
Mike Burrows
Chair BDMA Standards Committee

What common fund?

The problems of insurers increasing motor premiums for inappropriate reasons, highlighted by Fenella Radford (March 1) also occurs in the property insurance sector.

One of my clients had a fire ten days before the renewal date. An appointment could not be made with the insurer's loss adjuster until five days after the fire, by which time the insurers had increased the renewal premium from £1,200 to £2,800. This was done before the arrival of the loss adjuster, whose immediate function is to advise the insurers on whether the policy is likely to operate and secondly how much the claim might cost.

I will take some persuading that the insurers were entitled to increase the premium before they had any information about whether they had any liability under the policy.

In any event, most insurers clearly seem to have forgotten the basic concept of the common fund and almost always see a claim as an excuse to penalise the policyholder for having the cheek to use the product purchased.
Geoff Williams
Claimex Chartered Loss Adjusters