Risk managers told to punch their weight
Risk managers were told to put more pressure on insurance service providers to improve contract certainty and transparency by John Tiner, chief executive of the Financial Services Authority (FSA), at the Association of Insurance Risk Managers (AIRMIC) annual conference yesterday.
Addressing delegates in the opening keynote speech of the event, Tiner said there were still improvements to be made in the contract certainty, the timeliness of policy issuance, disclosure of data and commissions and the general efficiency of the buying process.
But he was surprised risk managers were not “punching their weight” in the drive for improvement considering the choice and power they hold within the insurance market. AIRMIC members alone account for 75% of the FTSE 100.
“Is it apathy from risk managers, lack of interest from their boards or a mixture of both? Is it just an acceptance of the old status quo?” Tiner asked.
According to Tiner, 20% of insurance contracts still do not meet acceptable standards of certainty and transparency and it up to risk managers, brokers and insurers to “eek out efficiencies in the buying process” together.
However, Tiner met resistance from some members of the audience, who complained that he had over-estimated the position of bargaining power risk managers really had with their brokers.
Tiner said the FSA would prefer to see a market-led solution to the current situation, but it may be forced to consider introducing mandatory disclosure laws if the industry cannot find its own answers.
“Treatment to a symptom is a poor substitute to treatment of the root cause,” he said.
Thomas Miller develops PCC pension product
Thomas Miller Risk Management has developed a new product to allow certain pension funds to be funded and managed through protected cells.
An employer will be able to form a protected cell or segregated cell to insure and fund its defined benefit pension scheme. The company pays contributions for its pension scheme into it. If the pension fund achieves a surplus, this gets paid to the employer.
The initiative will be implemented in either Bermuda or Guernsey, according to George Cameron, principal consultant with Thomas Miller Risk Management.
In Bermuda, the company will administer the scheme through its subsidiary Leeward Management Co.
James: Future lanscape
Jersey and Guernsey to make ICC improvements
Jersey and Guernsey are both considering amending their incorporated cell company (ICC) laws to allow individual cells to have their own boards of directors, according to an industry representative.
At present, each ICC has a board but the cells within it do not. Allowing each cell to have a board will improve control for the cell owner and may make the ICC structure more attractive to companies as a captive insurance vehicle.
Isle of Man next to consider ICC law
The Isle of Man Insurance and Pensions Authority (IPA) expects to introduce incorporated cell company (ICC) legislation in 2007.
The ICC structure allows participating cells to be distinct legal entities, thus providing added security to the protected cell company (PCC) structure.
So far ICCs have largely been adopted by the fund sector but the Isle of Man is hoping the structure will also appeal to corporations as a captive insurance option, according to Alan Rowe, senior regulatory analyst, non-life insurance, for the IPA.
“It’s another essential piece of kit to have in our tool box,” added an IPA representative.
The ICC structure was devised and first introduced in Jersey and was quickly implemented in Guernsey. The District of Columbia is also developing ICC legislation.
Elsewhere, the Isle of Man Parliament recently passed the Insurance Companies Amalgamation Bill, which helps facilitate the amalgamation of two or more captives.
For further information, contact Mark Baylis on 07775 693994, markbaylis@aol.com
Note to editors: AIRMIC (The Association of Insurance and Risk Managers) represents risk managers in the UK, including 80% of FTSE 100 companies. Their annual conference in Bournemouth runs from June 13-14, www.airmic.com