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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Floods:: will the insurance industry redeem or condemn itself?


When it comes to preparing for, coping with or recovering from, flooding it is highly recommended that property owners AND insurers listen to experts, such as our very own, Jeff Charlton …rather than to organisations peopled by …

individuals whose self-interest consistently supersedes the interests of their colleagues – clients – congregations – students – customers – members – citizens and IS the biggest threat to their own interests as well as our shared future!

Do so and, whether insurer or insured, you may be well on your way to coping with or avoiding nasty issues that impact both wealth and health.

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UK insurers: Arrogant, ignorant or deaf?


This isn’t the first time that PwC have warned the insurance industry. It is just after the 1st Anniversary of a warning that was “supported” by Citi…hence my question.

March 2010: Transparency – Trust – Trends – TRANSFORMATION

“According to our research, non-life firms could see significant capital increases under the directive as it currently stands, so it is vital insurers explore what options they have available to maximise capital now. This will include identifying where they believe current measures are inappropriate.”

Post Magazine Group News | LinkedIn.

Here is a “surprising” blog from Martin Friel at Insurance Age. I say surprising, merely because it was deemed worthy of comment! In the grand scheme of things that have gone so badly off the rails, in UK insurance, this strikes me as pretty mundane. Truth is, the really juicy stories just don’t tend to openly talked about or published. These are more about the people…whether directly (policyholders) or indirectly (investors)…who, ultimately, pay the price of yet more FS shenanigans. Because someone will pay the ferryman and, in reality, it looks like insurer results are going to have to be REALLY bad before they even attempt to justify rate-hikes in the current economic climate – and make highly leveraged, high growth, strategies pay off before financial collapse follows the, evident, failure of risk management and moral corruption – but NOT BEFORE all kinds of awkward questions about rating bases, broking remuneration and claims handling/management are asked:

Why on earth would an underwriter go anywhere near a book of business that had a 90% loss ratio? Unless the company in question is putting some astronomical rates into the market, then I just don’t see how this can work. I’m not an expert by any stretch of the imagination but surely this is essentially encouraging every broker with a poorly performing motor fleet book to, I believe the term is, fill their boots.