Record of meeting on 5 July 2005 between the industry and the FSA

Attendees

  1. A list of those present is attached.

Background

  1. The FSA is setting the industry a challenge to secure a market-driven solution to the issue of contract certainty by December 2006. The work fits within the FSA's strategic aim of promoting efficient, orderly and fair markets, working with the grain of the market wherever possible. It will reduce the operational and legal risks to brokers and insurers and improve service and clarity of offering to customers. It will enhance transparency whilst preserving the diversity and competitive position of the market. Failure to achieve a market solution will result in regulatory intervention but that is not the FSA's preferred outcome.
  2. Two previous meetings with the industry took place on 20 December 2004 and 2 February 2005. Since then, the FSA has been following the work of the two industry working groups (covering the Subscription Market and "Non-slip" (non-subscription) Market), overseen by an industry Steering Group which includes the Chairs of the working groups and representation from insurance brokers and insureds.
  3. The purpose of the meeting on 5 July was to assess the industry's progress to date: as this is a market initiative the FSA was keen to hear feedback from the industry in an open forum. This is a public a record of the meeting.

Progress

  1. The FSA received progress reports from Nick Prettejohn, representing the Steering Group and Subscription Market, and Duncan Boyle representing the Non-slip Market. The Subscription Market Group has built on the work of the Market Reform Group; the Non-slip Group has surveyed the market to establish the extent of any problems through lack of contract certainty.
  2. A definition of contract certainty, applicable across the market, has been agreed as follows –

    'Contract certainty is achieved by the complete and final agreement of all terms (including signed down lines) between the insured and insurers before inception.'

  3. The presentations are: Market Reform Group Progress Report and Non-Slip Market. It was pointed out that the figures in slide five of the Subscription Market presentation had improved significantly: 34 out of 41 IUA and 136 out of 144 LMBC firms had responded.
  4. Overall, the Steering Group noted that a great deal of effort had been made by the market and, although some difficult issues will need to be resolved in the next quarter, significant progress had been made to date. There was no disagreement to this position by those present.

Market engagement

  1. The FSA noted the responsibilities of individual firms in delivering contract certainty. Buy-in across all sectors of the market is crucial to the success of – and is the key risk to - this market initiative. Changing behaviours, culture and existing market practices remains a significant challenge.

FSA focus

  1. The FSA outlined its programme of work over the next six months -
  • assessing progress by individual firms to achieving contract certainty
  • ensuring that unmitigated risks (such as operational and legal risks) are considered within Individual Capital

Assessments

  • monitoring progress by the working groups with particular focus on complex aspects of implementation
  • engaging with infrastructure providers such as Xchanging, Kinnect and ri3k

 

Conclusions

  1. FSA acknowledges the progress made by the market in the first six months of its two year challenge. The FSA remains of the view that a market-based solution is preferable to regulatory intervention. In parallel with the market's own work, the FSA has formed a credible option for regulatory intervention. In a formal 'stocktake' in December 2005, the FSA will determine whether sufficient progress has been made to meet the December 2006 challenge.
  2. It was agreed that a further meeting would take place in November 2005.

 

 

Attendees

FSA

Hector Sants – Managing Director, Wholesale Business Unit
David Strachan – Director, Insurance Sector Leader
Tom Huertas - Director, Wholesale Firms Division
Julian Adams - Head of Wholesale Insurance
Sarah Dalgarno - Manager, London Market Brokers
Amanda Bowe - Insurance Sector Team
Ambika Siva - Lloyd's Team

Steering Group

Nick Prettejohn - Lloyd's
Duncan Boyle - RSA
Andrew Cornish - AIRMIC
Stephen Matanle - Marsh

Brokers

Richard Bucknall - Willis
Malcolm Forbes-Wilson - AON
Ken Carter - JLT

Insurers

Dan Glaser - AIG
Ruurd de Fluiter - Swiss Re
Chris Giles - Chubb
David Martin - Zurich
Tony Mednuik - Global Aerospace (Chair of IUA)
Andrew Kendrick - Ace
Steve Quiddington - Lloyd's

Trade bodies

David Hough - LMBC
Dave Matcham - IUA
David Gamble - AIRMIC
Simon Sperryn - LMA
John Mackenzie - ABI


Alex Letts - Ri3k Ltd

 

 

 

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