As an insurance broker with the professional duty of putting the interest of my clients before all other considerations without being unfair to insurers, I commend this year's Reith Lecture by Professor Onora O'Neill in which she argues trust is the first casualty of the cult of transparency to the serious consideration of all working within the UK insurance industry.

This is because the British Insurance Brokers' Association (Biba) at its recent conference focused attention on the need for trust in the business world.

O'Neill argues that in judging whether to place our trust in others' words, we need the means to judge that information and that reasonably placed trust requires evidence about those who put proposals to us.

She then continues that if making information more widely available is the key to building trust we must be on the road to an ever more trusting society - something that is clearly not the experience of the UK insurance industry behaviour.

To understand the importance of this proposition it is first necessary to define insurance - my own working definition being that insurance is the ultimate tool of risk management, consisting of a promise for a premium.

In turn that promise is dependent on both the ability and intent to pay, if and when properly called upon. Hence the need for trust which Mr Justice Thomas defined in his national lecture to the Chartered Insurance Institute's (CII) Society of Fellows `Should insurance be given special treatment under the law?' as the bilateral duty of good faith, something also known within the industry as uberrimae fidei, or of the utmost good faith, - each side being completely fair to the other.

Circumstances change, but principles do not, thus, living in the world of caveat emptor and self-interest, I suggest - others may agree - the problem to be addressed is how we can restore the balance between trust and self-interest, which has led inter alia, to the present problem of blurred boundaries that have come about since insurance was omitted from the Unfair Contract Terms Act [1977] with a resultant loss of trust.

This loss of trust was acknowledged in a 1995 survey conducted by the Worshipful Company of Insurers where 75% of participating members (mostly retired) were reported as thinking insurance was then in ethical crisis - a fact which became subject of Professor Jack Mahoney's paper on `Ethics in the UK insurance industry' published in the CII Society of Fellows journal in January 1997.

John Lynch
Managing director
Insurance Advisory Services

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