U.K. Regulator Wants Industry To Fix Self Or Else

U.K. Regulator Wants Industry To Fix Self Or Else

By Mark E. Ruquet

NU Online News Service, Dec. 14, 4:23 p.m. EST?The insurance industry will be given an opportunity to fix their business practices before his organization brings the hammer down on it, the chief executive of the U.K.'s financial regulatory body said yesterday.[@@]

John Tiner, chief executive of the Financial Services Authority, laid out what the U.K. insurance industry needs to do to become efficient and disciplined for the future.

Mr. Tiner, speaking in New York at the LeBoeuf, Lamb, Greene & MacRae law firm insurance symposium, called on London Market executives, including those at Lloyd's, to come together to find the solutions for the U.K industry.

A non-governmental body, charged with regulating the U.K.'s financial services industry, the FSA will take over the regulation of brokers in the property-casualty market Jan. 14, 2005.

Mr. Tiner laid out a series of issues he feels the industry needs to address. Among the items are speed to market, upgrading and investment in technology, transparency, and contract certainty.

He cited the World Trade Center trials in New York, where leaseholder Larry Silverstein sued a number of insurers over whether the 9/11 terrorist attack was one or two incidents, as a perfect example of why the industry needs to overhaul itself.

"The industry has underinvested in technology and in process improvement, and it has become a field day for lawyers who pick up pieces when an insured makes a claim or cover which they believe has been underwritten but for which policy wording has not been agreed," he said.

He said he has invited the chairmen and chief executive officers of the major brokers and underwriters to come together within the next two years and iron out solutions to contract certainty issues. He added that should the industry not be able to come up with its own solution, "we have a number of tools at our disposal which can create tough incentives for them to get it right."

In a statement, Joe Plumeri, chairman and CEO of London-based Willis Group, said, "These are all initiatives we at Willis support with the goal of changing the industry to meet the needs of our constituents. Today, we are pleased that Mr. Tiner has assumed the mantle of leadership and we look forward to working with him, the FSA and other insurance leaders to move the industry forward on these important matters."