Whiter than white?

After a year of scandals in the financial services industry, regulation is again at the forefront of the industry's mind.

It is an issue that Gerald Williams, president of the Chartered Institute of Loss Adjusters (CILA), wants to talk about before he relinquishes his post and hands over to George Moss on 12 April.

"Loss adjusters are an integral part of the insurance industry. And the insurance industry is an integral part of the financial services industry. At the moment the financial services industry is being caned because of a whole mass of problems such as the auditing firm Andersen, Independent Insurance and Equitable Life scandals.

"As an integral part of the financial services industry then, it would be foolish in the extreme to avoid regulation and to pretend we don't need it."

Working with the new regime
Two weeks ago, CILA had to postpone its meeting with David Kenmuir of the Financial Services Authority (FSA) - due to "illness and nothing else" Williams stresses - to discuss how loss adjusters can work with the new regime.

"The FSA has set its stall out on the broader remit of regulating those companies in `after sales' work. Where do loss adjusters fit in? In the after sales arena. So it is vital we talk to the FSA.

"I don't see this as a bad thing. If we are regulated, it can only improve our standing in the market considerably and widen our profile among the public. Sadly loss adjusters have over the years not had a good image in the eyes of Joe Public. We need to polish this up," he says.

But when compared to the rest of the financial services sector, he says loss adjusters can take the moral high ground.

"This is a case of shutting the stable door after the horse has bolted. It is worth mentioning that, though we have recently seen scandalous behaviour in the insurance industry and the banking community, I don't have a recollection of such major malpractice among our members.

"We are squeaky clean and it is a first-rate testimony to the professionalism of our industry," he says.

CILA's members do not want to lose the momentum generated over the past

12 months as a result of the initial discussions over compliance to the General Insurance Standards Council (GISC) rulebook.

"Throughout last year CILA members and the big four loss adjusters had various meetings with the GISC. It got to the point where loss adjusters and other intermediaries in the market could become members of the GISC.

"All those meetings were progressing very well and proposals were on the table being discussed and addressed, when suddenly Ruth Kelly [Economic Secretary to the Treasury] made her announcement.

"Those proposals that were on the table won't be relevant now. The whole problem with the GISC, as far as loss adjusters are concerned, was that its rulebook didn't permit loss adjusters to become members. This was the point - and had it got authority for the F42 rule to go through, which it always presupposed it would get, this would have allowed our members to join."

Companies which put in place efficient and proper systems to handle claims management should not be scared of regulation. "It is those that haven't who will ultimately fail and it is arguable they deserve to fail," Williams says.

These regulatory concerns prompted a historic move last week. CILA and the Chartered Insurance Institute (CII) announced a joint working party had been established to discuss how the two institutions could work together in the future on non-competitive areas and, in particular, combining forces over examinations.

No merger planned
Williams is emphatic that these closer ties are not the beginnings of merger talks or CILA establishing itself as a trade association which had been rumoured.

He refers back to a speech he made last October in which he stated that "appropriate co-operation and an acceptance of the need to change" could take place between institutions "without the need for any loss of individual identity".

Williams predicts this co-operation could lead to an umbrella organisation, made up of the financial services' sector institutions and associations, being set up to deal directly with the FSA.

"What I'm talking about here is the future of the financial services sector - not just loss adjusters. I see the forming of an overall organisation, which enables the various parties to keep their respective identities, structures and qualifications, but to operate under one massive umbrella.

"It is attractive for two reasons. First, the FSA will not want to deal with 15 or however many institutions there are. They will want to deal with just one.

"The second reason is there is a wide range of different institutions setting up their own websites and their own examinations. So, ultimately, there will have to be a greater amount of co-operation - all feeding off the one umbrella organisation.

"As loss adjusters we have set out to become the one global body which specialises in claims handling. I see no reason at all why we should not continue in that role and the umbrella group assists that role - and also gives us a kick up the backside when we need it.

"But that will be George's job," he says with a smile.

Correction
Last week, Insurance Times published an article "What's hot and what's not" (p18-19) in which we stated that AXA had exited the London Market. This was incorrect. To clarify, AXA is still writing insurance business including property classes, general third party, motor fleet, and employers' liability, and reinsurance treaty and marine business as well as some facultative UK business. We apologise to AXA for any inconvenience caused