UK insurance ‘dissected’


I felt compelled to respond to some comments that were prompted by a previous article:

IBM Insurance:: does the industry really care what customers want? I wonder…

The following comments come from a, highly experienced and senior, former insurance executive, who now works for one of the major Global Consulting firms. Obviously I wouldn’t name names without first gaining the approval of the individual in question but I really wanted to share my thoughts. After all that’s why I blog.

For many years I have eagerly anticipated some meaningful debate with thought leaders, passionate or concerned people from within the insurance industry. But I have been, consistently disappointed. I wish I was more confident that these views might spark some meaningful discussion…but I won’t hold my breath!

The comments:

I think David Wilson is making the point that despite the results of the IBM survey, he’s seeing little action from the UK insurance industry. I think at the moment UK and Western European insurers have their hands full with Regulation – Solvency II, RDR – and this is diverting their attention.

Even so, in terms of innovation, UK insurers (or at least Northern European insurers) are seen as leading the global pack in terms of capital effectiveness and optimisation, with the North American market looking to UK as an example of best practice especially in the area of risk management.

My response:

What are the key issues identified:

  1. Compliance with additional Regulation – brought about by cultural, operational and regulatory failures
  2. UK & Europe seen as innovation leaders – based upon the above, should this be the case? And,
  3. capital effectiveness and optimisation – are these correct metrics for innovation and compliance?
  4. risk management – where is the evidence of “best practice”? – I see plenty of evidence of “bad practice” that has become ‘accepted practice’ across the industry. What are current practices in relation to complexity, business resilience and systemic risk?
    Insurance and banking have convinced themselves that they have been/are innovative but, if this is true, why are they the least trusted and most complained about industries according to their customers? Does that not explain the perceived need for more regulation?

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Why not “constructive transparency”?


I recently came across a very interesting article that brought to my attention a phrase I hadn’t come across before: constructive ambiguity.

Isn’t that an oxymoron???

The article is here and it touches upon a topic and writers I have written about before in relation to business as war. If you like you economics with a social conscience and a philosophical perspective Ashwin’s your man.

“The interaction between the market participants, and for that matter between the market participants and the regulators, is not a game, but a war.”

Rick Bookstaber

However, in this article ‘constructive ambiguity’ was being used in terms of preventing moral hazard within a regulatory regime.

That’s when it struck me! Why not constructive transparency?

transparency(1)

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The certainty of uncertainty


When the business of a business is pretty predictable, as it was in the Industrial era, there is less need to focus on resilience or responsiveness. In the old days, business could undertake planning exercises and be reasonably safe in the knowledge that the functioning of the business would be able to successfully execute its plans and that the environment would not impinge too greatly on those plans. In the modern era where knowledge is “a core commodity and the rapid production of knowledge and innovation is critical to organisational survival” (Bettis and Hitt, 1995, ‘The new competitive landscape’), business needs to get to grips with the reality of uncertainty and decreasing forecastability. Businesses also need to remember that they are living systems within wider living systems. Global environmental, political, economic and financial challenges all impact on a business’s ability to succeed.

quantum shifting

Sometimes you read something that really strikes a chord.  I recently saw this quote from Kurt Vonnegut:  “We have to continually be jumping off cliffs and developing our wings on the way down.”  In other times, I would read this and it would simply seem like a poetic truism, but I’m currently experiencing a number of shifts in my personal situation which made me read that quote as if it was written just for me.  These shifts are creating a fair amount of uncertainty and bringing up all the associated emotions that go with it.  In times like this, it is useful for me to remember that trying to control what is going on in my world will not lead to the best outcomes and in fact, that I need to call on the kind of resources that will best keep me going in times of uncertainty.  These resources, in…

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